Steve Blank Sounds Warning for U.S. Academic Research Decline

The very talented Steve Blank has laid out a case for why U.S. academic research is in serious trouble based on recent U.S. policy changes.  As he states, once you lose your advantage it's unlikely to be regained.  My guess is that there's a certain point at which the lead is lost and is too difficult to regain.  A March 2025 Nature article reports on a poll which indicates that of 1,600 scientists surveyed around 75% are contemplating moving with Canada or Europe as top destinations. I wonder what unintended consequences--particularly those that are beneficial for the United States--may exist in distributing U.S. researchers around the world. Could they be lured back in three years and seven months?  And, what could be some unintended negative consequences?  Do we really want to lose our best researchers during a military build-up around the world?  Gee whiz, it seems like almost everything is a national security issue and all technology is dual use.  Steve Blank's blog post is available, here.  

Bad Timing: Starving the University Technology Transfer System

A group of over 1000 scientists who are elected members of the National Academy of Sciences, Engineering and Medicine has released a letter expressing concern with the Trump Administration’s handling of research funding.  The letter states, in part:

If our country’s research enterprise is dismantled, we will lose our scientific edge. Other countries will lead the development of novel disease treatments, clean energy sources, and the new technologies of the future. Their populations will be healthier, and their economies will surpass us in business, defense, intelligence gathering, and monitoring our planet’s health. The damage to our nation’s scientific enterprise could take decades to reverse. 

The AUTM, the Association of University Technology Managers, noted that the Great Recession would have been much worse if it had not been for university technology transfer.  Harming the engine that’s been creating innovation and new business may not be such a good thing right now.  Besides pushing us into a recession, I do wonder what the political fallout will be of the increased removal of research funding from universities.  Not only do universities spin-off companies to varying degrees of success but there are universities located in many, many congressional districts--and those universities are major regional employers.  The full letter is available, here.  The Scientific American discusses the full letter, here. 

Japanese Universities Having Trouble with Tech Transfer

Nikkei Asia has published an article by Kenjiru Suzuki titled, "Japan's Universities Fail to Make the Most of Intellectual Property: Due to Lack of Support, Patents Only Make 2% Compared to U.S. Schools."  The title provides a nice summary of the article's findings.  Research has pointed to differences between countries and their innovation systems as to why a specific country may not experience the relative success of U.S. universities in technology transfer.  For example, there may be differences in university culture, laws concerning taking a company public, corporate formation laws, laws concerning mergers and acquisitions, tax law, amount of available funding, expected licensing terms, skilled workforce, specific IP and data rights laws, networks of support and engagement, university researcher buy-in, and availability of capital (among other things).  I confess I am surprised that Japan has not realized more success in this area.  

U.S. FTC Supports March-in Rights Guidelines

The U.S. Federal Trade Commission has released a comment in support of the NIST’s guidelines concerning the exercise of march-in rights under the Bayh-Dole Act.  The Press Release states:

Today the Federal Trade Commission issued a comment in response to the National Institute of Standards and Technology’s (NIST) request for information on its Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights under the Bayh-Dole Act.

Under the Bayh-Dole Act, the federal government has the right to “march in” on patents on inventions created using taxpayer funds—to require the patent holder to license the federally funded patent to other applicants. The draft interagency framework provides guidance outlining when the government should exercise its march-in rights, which have never before been utilized. The draft framework makes clear that high price is an appropriate basis for exercising march-in rights. 

In the comment, the FTC applauds NIST, which is part of the U.S. Department of Commerce, and the Interagency Working Group for Bayh-Dole, which includes the U.S. Department of Health and Human Services, for their efforts to reactivate march-in rights as an important check on companies charging Americans inflated prices for drugs developed with taxpayer-funded research. In the comment, the FTC expressed support for an expansive and flexible approach to march-in rights, including providing that agencies can march in on the basis of high prices.

The FTC’s comment draws on its experience in promoting competition and combatting anticompetitive practices in the pharmaceuticals industry. Lack of competition in pharmaceutical markets can lead to inflated pricing, rendering some lifesaving treatments out of reach for many Americans. Nearly three in 10 Americans report rationing or skipping their medications due to high costs. Contrary to industry claims that high drug prices are necessary to fund research and development (R&D), drug prices often depend more on whether the drug faces competition than the drug’s R&D costs. At the same time, pharmaceutical firms enjoy hundreds of billions of dollars of taxpayer investment in R&D. March-in rights are an essential check to ensure that taxpayer-funded inventions are affordable and accessible to the public.

The FTC’s comment further explains that although march-in rights can be a valuable tool to address potential harms in the pharmaceutical industry, broader challenges requiring government-wide solutions remain. For example, dense “patent thickets” result from pharmaceutical companies using increasingly large patent portfolios to protect a single treatment. This may weaken the utility of march-in rights to provide affordable public access to drugs  because some pharmaceuticals may be protected by patent thickets that include privately funded blocking patents in addition to government-funded patents subject to march-in rights. In its comment, the FTC  urges agencies to work collaboratively to also address such patent thickets.

The Commission voted 3-0 to approve filing of the comment.

The Exercise of Bayh-Dole March-in Rights Coming Soon?

The U.S. Department of Commerce, National Institute of Standards and Technology has released a proposed framework for analyzing whether march-in rights under the Bayh-Dole Act should be exercised.  Notably, march-in rights have never been exercised.  A concern is that exercise of the rights could create a disincentive for companies to invest in commercializing government funded inventions.  Additionally, there is a concern that basing the exercise of march-in rights on pricing concerns will be particularly harmful.  The proposed framework can be found, here.  There is a comment period as well.  The proposed framework contains several Scenarios with a sample analysis of the problem.  All of the Scenarios are worth reviewing, but I found 5 and 6 to be particularly interesting.  The following includes the analysis under Scenario 5 and 6:

Scenario 5

Background: A water filtration company has an exclusive license from a government-funded university to patents covering a subject invention for point-of-use water purification technology. The company manufactures a small device, which can be used to remove organic contaminants like pesticides in households that get their drinking water from wells. Ten years ago, a certain pesticide became very popular because it was safe for native U.S. pollinators but effective at combatting an invasive beetle destroying crops nationwide. But recent studies have shown a ten-fold increase in pediatric cancers that is connected to drinking groundwater contaminated with that pesticide. The water filtration company's point-of-use purification device is uniquely able to remove even trace amounts of that pesticide. As a result, demand has spiked. However, the company has not increased its manufacturing pace, so the price of the devices has jumped 1000% in the past three months. The combination of the limited supply and increased prices has resulted in a health emergency that cannot be adequately addressed without expanding capacity. Three other manufacturers and a dozen rural community groups have asked the government funding agency to march-in and issue licenses to increase supply and reduce cost of the specialized filters.

Discussion: Given the pressing need, march-in would be among a range of options the agency would likely consider for resolving this problem promptly and protecting children.

Statutory Criteria —In this scenario, it appears that march-in may alleviate a health or safety need that, at this time, is not reasonably being satisfied by the contractor or its licensee (Statutory Criterion 2). First, the agency would seek to confirm underlying information, including about the health or safety need. For example, the agency would consult with experts and appropriate agencies, seek available information about how the pesticide contributes to pediatric cancer, and investigate how (and how effectively) this purification device removes the pesticide (Statutorily Defined March-In Criteria; Criterion 2; Sections I–III). The agency would also confirm basic facts with the contractor, including whether it is refusing to ramp up manufacturing and how much the price has increased. All of this would be with an eye toward mitigating the risk of pediatric cancer, which in this scenario would appear to require an increased supply and accessible filtration devices (Section IV). The agency would likely assess whether the contractor is in fact exploiting the health or safety need to set a product price that is egregious within the U.S. market and unjustified given the totality of circumstances (Section IV, E). If the evidence suggests this 1000% increase was an intentional act by the company to “cash-in” on this newly discovered health and safety need, that would weigh in favor of march-in. However, if the entire market has seen similar price increases and there is a compelling justification for such a high price, e.g., a shortage of essential raw materials is making increased production impossible, that would weigh against march-in.

Policy & Objectives of Bayh-Dole —The agency would similarly need to assess the practical impact of march-in on the unmet need and carefully evaluate all alternatives (Would March-In Support the Policy & Objective of Bayh-Dole). For example, if the pesticide stays in the water supply long term and there's no indication other solutions will become available very soon, that would weigh in favor of march-in. If farmers are no longer using the pesticide in question and it dissipates quickly, then the demand for filters could subside soon, weighing against march-in. Additionally, the fact that there are already other interested manufacturers suggests march-in could increase production by these entities soon, weighing in favor of march-in. However, the agency would need to examine the capability of the prospective licensees and manufacturers and be comfortable these are “reasonable applicants” that could get a product to market (Section I, E). Here again, the agency would also consider possible alternatives, like other technologies to protect children (Section II). For example, perhaps another agency has already banned the pesticide and that, combined with an alternative filtration technology, could bring the pesticide levels to a safe percentage within the year, weighing against march-in. Finally, the agency would analyze the wider implications of march-in to ensure consistency with Bayh-Dole policy and objectives (Section III). The agency may determine that exercising march-in rights would have a meaningful positive impact on child health, increase confidence that federally funded inventions are available to improve the lives of Americans, result in increased competition, and set an example of actions by contractors or licensees that are “off limits.” The agency may determine those factors outweigh any negative impacts on investments in future federal R&D, given the apparent bad-faith actions of the contractor (Sections III, A, 2; III, 3).

 

Scenario 6

Background: In the early stages of a respiratory virus pandemic, a consumer goods company working under a government contract developed improved face masks that filter out 99% of that virus' particles. The contractor filed for a patent on its mask technology, and it reported the subject invention and associated patent application to the government. During a three-week window, several experts published studies confirming that the virus spreads easily and rapidly through airborne transmission. The following week, the consumer goods company increased the price of its masks 100%, and it continued to raise the price over the course of a month, resulting in a 400% price increase. The company has also sent letters to other mask manufacturers, flagging the pending patent application and promising to file lawsuits against any infringers as soon as the patent issues. Trade associations representing frontline healthcare workers asked the government funding agency to march-in and issue licenses to those other manufacturers to bring down the price of the masks.

Discussion: Given the urgent need, march-in would be among a range of options the agency would likely consider for resolving this problem promptly and protecting frontline workers.

Statutory Criteria —In this scenario, it appears there could be actions that promote nonuse or unreasonable use of the subject invention (Criterion 1) as well as health and safety needs that are not being reasonably satisfied by the contractor (Statutory Criterion 2). The agency would first ask the contractor for information to confirm the basic facts—for example, that the contractor has increased price 400%, how that increase compares to prices for other masks, how that price point compares to the cost of developing and manufacturing the masks, that the contractor has filed for patents, and that it is threatening to file suit against competing manufacturers when a patent issues. Based on that, the agency could continue its inquiry to assess whether march-in would alleviate an unmet health need and/or ensure the benefits of the mask are available to the public on reasonable terms, exploring questions detailed in Statutorily Defined March-In Criteria; Criterion 1 and 2. In this scenario, more affordable masks are needed and it may be that more mask production would bring down the price (Section III; IV, E). The agency would likely need more information to assess whether the contractor is exploiting the health or safety need in setting a product price that is egregious within the U.S. market and unjustified given the totality of circumstances and/or whether the masks are available on reasonable terms (Section IV, E). By rapidly increasing the price of masks and threatening other manufacturers with litigation during an urgent public health need, the contractor seems focused on keeping prices unusually high while not satisfying demand. This could weigh in favor of march-in. But the agency would need additional information, for example, to understand the unmet need, how march-in would impact it, and why the contractor is responding this way. Are other mask manufacturers charging similarly high prices under the circumstances, all to fund facility expansion? If so, that would weigh against march-in (Section IV, E). Is there a strong connection between mask usage (or mask availability) and public health benefit? Does this mask provide unique benefits over others? Stronger evidence the masks resolve a health need could weigh more in favor of march-in, whereas tangential evidence of unique benefits could weigh against march-in (Section III). Is there a legitimate reason not to license other manufacturers for this mask, e.g., they lack capacity or capability? Answers to those questions could justify the contractor's actions and weigh against march-in (Section IV, E).

Policy & Objectives of Bayh-Dole —The first part of this analysis looks at whether march-in would promote utilization and protect against non-use of the subject invention (Would March-In Support The Policy & Objective Of Bayh-Dole Section I). The agency would need to understand whether other manufacturers are “responsible applicants” that would be interested and willing to make the masks in question (Section I, E). The agency would also likely want to understand the impact of the pending patent application and threat of (possible) litigation on the other manufacturers (I, B; II, E). If the other manufacturers are actually deterred from making the product, then that could weigh in favor of march-in. However, if other manufacturers do not believe valid patents are going to issue on this subject invention, and those manufacturers are willing to immediately start manufacturing masks, that could weigh against march-in. The agency would also consider whether other action might be warranted—for example, the agency purchasing or manufacturing the masks itself at a lower price (Section II, A). Whether march-in would protect the public against non-use or unreasonable use of subject inventions more broadly likely depends on similar facts (Section III). However, in a situation of a pressing health or safety need, where a contractor is artificially keeping supply low while demand for a product is high or artificially increasing the price, march-in could deter others from similar actions in the future without impacting contractors and licensees who act in good faith to bring products to market and meet market demand (Section III, A, 2).

A Compelling Read: New Yorker Article on the U.S. Department of Justice's "China Initiative"

The New Yorker has published an important, fascinating and excellent article concerning Franklin Tao, a university researcher, who was caught up in the U.S. Department of Justice's China Initiative.  The article is titled, "Have Chinese Spies Infiltrated American Campuses," and is authored by Gideon Lewis-Kraus.  The article mostly focuses on Mr. Tao's experience, but also raises numerous important questions about the Trump Administration's China Initiative and its general approach. Notably, the Biden Administration has discontinued that initiative, but see here on addressing "The PRC Threat." The article may be classified as additional proof under the Trump Administration critique: "Can Spot a Problem, But Proposes Unworkable and Likely Ultimately Unproductive Solutions." The article could focus a bit more on how in some technical fields the line between basic and applied research is blurred.  Additionally, the question of industry competitiveness (and dare I say protection) is an important one that has national security implications--especially in a global economy.  This is particularly true where private interests control a significant amount of critical (and other) infrastructure and national governments spend significant amounts of funding on research and development that leads to economic development.  It is important to remember that many universities in the United States are land grant institutions with direction to help develop local economic interests.  The Bayh-Dole Act itself points toward a preference for U.S. economic development.  Moreover, democracy relies upon the trust and the relative prosperity of many of its citizens (the protection of good paying middle class jobs). The article seems to indicate that the big difference between now and past policy concerning approaches to sharing technology with, for example, the Soviet Union, is that the United States is no longer perceived as being "on top."  There may be some truth to that, but I don't think it is the full story: a lot has happened since then besides that fear. The important recommended article is available, here. I hope it stimulates more thought and conversation. 

mRNA Vaccine Patents Study

Mario Gaviria and Burcu Kilic have published an interesting article titled, “A Network Analysis of Covid-19 mRNA Vaccine Patents.”  The article helpfully provides information concerning the relationship between entities, patents and licenses concerning mRNA vaccine patents.  Notably, the article identifies foundational patents from the University of Pennsylvania and the University of British Columbia and traces the relationship through various entities.  The article is available, here. KEI provides an analysis of potential U.S. government funding of some of those patents, here. 

Regulatory Changes Coming to the Bayh-Dole Act Regs?: Free Webinar

UIDP is holding a free webinar at 9:00 am Pacific Standard Time on January 14, 2021.  The webinar is titled, “Implementation of the NIST ROI Green Paper Findings.”  The description states:

Based on input from thousands of organizations in the research community, the National Institute of Standards and Technology (NIST) has recommended legislative changes to dramatically increase the ROI from the billions in government investment in research and development. This webinar will showcase the pending changes and provide information on the new opportunities and streamlined processes for universities and businesses that interact with federal labs or receive federal funding. The implications of the changes for research organizations both in the U.S. and abroad are significant.

Background: In April 2019, the National Institute of Standards and Technology (NIST) announced the release of a final green paper from its Return on Investment (ROI) Initiative for Unleashing American Innovation. This national goal aims to dramatically increase returns from the more than $150 billion per year of U.S. federal government investment in research and development. The NIST ROI Green Paper provided a summary of private and public stakeholder inputs received from hundreds of experts and organizations representing thousands of companies, universities, federal laboratories and other institutions. The document identified 15 findings by NIST to help inform decision-making and implementing actions by the relevant departments and agencies that could further enhance the U.S. innovation engine at the public-private interface. A number of the findings noted that implementation would require revisions to the Stevenson-Wydler Technology Innovation Act of 1980 or the implementing regulations to the Bayh-Dole Act. In response, NIST has vetted through informal and formal interagency processes and delivered both a legislative proposal containing 10 findings for modernizing the Stevenson-Wydler Act, and a Notice of Proposed Rulemaking for updates to the Bayh-Dole Act regulations.

The speaker is Courtney Silverthorn, the Acting Director of the Technology Partnerships Office at the National Institutes of Standards.  The moderator is Jay Schrankler, the Associate Vice President and Head of Polsky Center for Entrepreneurship & Innovation, University of Chicago.  Registration information is available, here. 

Extra Protection for the Bayh-Dole Act Needed in the United States?

Bayh-Dole 40 is a new coalition of supporters of the landmark legislation concerning technology transfer—the Bayh-Dole Act.  The Bayh-Dole 40 has an attractive website with information concerning the history of the Act and its impact.  The press release states: 

Today, a diverse group of research and scientific organizations, as well as those directly involved in commercializing new products, launched Bayh-Dole 40, a coalition that will celebrate and protect the University and Small Business Patent Procedures Act of 1980, better known as the “Bayh-Dole Act.”

The Bayh-Dole Act has empowered universities, small businesses, and nonprofits that have received federal grants to retain ownership of any patented inventions — and license those patents to private firms, who then turn promising ideas into real-life products that improve peoples’ lives. Thanks to Bayh-Dole, the public and private sectors have worked together to translate basic scientific research into life-saving drugs and medical devices, internet and GPS technologies, rechargeable lithium-ion batteries, and countless other innovations.

“Bayh-Dole made the United States the engine of global innovation,” said Bayh-Dole 40 founder and executive director Joseph Allen, who helped enact the law as a member of Senator Birch Bayh’s U.S. Senate Judiciary staff. “The Act reinvigorated research and development in America, spawning breakthrough discoveries ranging from high-yield crops to advanced medicines.”

Thanks to Bayh-Dole, over 200 new therapies — including drugs and vaccines — have been created since 1980. The legislation has also bolstered U.S. economic output by $1.3 trillion, supported 4.2 million jobs, and led to more than 11,000 start-up companies.

Bayh-Dole 40’s founding members include AUTM, Biotechnology Innovation Organization, BioHealth Innovation, Council on Governmental Relations, Information Technology and Innovation Foundation, Licensing Executives Society, and PhRMA, spanning the entire U.S. innovation ecosystem. The coalition will educate lawmakers to ensure the Act is utilized in the way Senators Birch Bayh and Bob Dole envisioned.

“Misusing Bayh-Dole to undermine the existing framework for public-private technology transfer and development, as some lawmakers are suggesting, would jeopardize the future of U.S. life-sciences innovation,” said Stephen Ezell, Vice President of Global Innovation Policy at the Information Technology and Innovation Foundation. “We look forward to engaging Congress on these issues to ensure the United States remains a life-sciences R&D powerhouse.”

About Bayh-Dole 40: Bayh-Dole 40 is a coalition of research and scientific organizations, as well as those directly involved in commercializing new products, dedicated to celebrating and protecting the University and Small Business Patent Procedures Act of 1980, better known as the “Bayh-Dole Act.” The coalition was formed to educate policymakers about Bayh-Dole’s positive impact on medical innovation and defend the Act against imminent threats during its 40th anniversary year.

Bayh-Dole 40’s members include the Association of University Research Parks, AUTM, BIOCOM, BioHealth Innovation, Biotechnology Innovation Organization, California Life Sciences Association (CLSA), Columbia Technology Ventures (CTV), Council on Competitiveness, Council on Governmental Relations, Fuentek, Information Technology and Innovation Foundation, IPWatchdog, Lehigh University Office of Economic Engagement, Licensing Executives Society (LES), Licensing Executives Society (LES) Silicon Valley Chapter, National Venture Capital Association, Pharmaceutical Research and Manufacturers of America, Pristine Surgical, STC.UNM, the IDEA Center at the University of Notre Dame, Wisconsin Alumni Research Foundation, and the Yale Office of Cooperative Research.

It is interesting that the existence of the coalition is necessary to protect the Bayh-Dole Act.  There is some polling to support that U.S. Senator Bernie Sanders could defeat President Trump in an election, but I wonder if anyone really believes that polling (besides Sanders supporters) after the results of the last Presidential election. Maybe the concern will be what happens in the election after this one.  

Improving the Allocation of Resources: Artificial Intelligence to Predict Future Clinical Success of Basic Research

In a new paper published on October 10, 2019 titled, “Predicting Translational Progress in Biomedical Research,” authors B. Ian Hutchins, Matthew T. Davis, Rebecca A. Meseroll, and George M. Santangelo describe a new way to use artificial intelligence to measure and predict which basic research type findings are likely to be translated into clinical advances.  The abstract states: 

Fundamental scientific advances can take decades to translate into improvements in human health. Shortening this interval would increase the rate at which scientific discoveries lead to successful treatment of human disease. One way to accomplish this would be to identify which advances in knowledge are most likely to translate into clinical research. Toward that end, we built a machine learning system that detects whether a paper is likely to be cited by a future clinical trial or guideline. Despite the noisiness of citation dynamics, as little as 2 years of postpublication data yield accurate predictions about a paper’s eventual citation by a clinical article (accuracy = 84%, F1 score = 0.56; compared to 19% accuracy by chance). We found that distinct knowledge flow trajectories are linked to papers that either succeed or fail to influence clinical research. Translational progress in biomedicine can therefore be assessed and predicted in real time based on information conveyed by the scientific community’s early reaction to a paper.

The full paper is available, here.  This appears to have the promise of mitigating some significant investment risk.  

The U.S. National Institute of Standards and Technology Green Paper on Improving Technology Transfer

The U.S. National Institutes of Standards and Technology has released its Final Green Paper on its Return on Investment: Unleashing American Innovation Project.  Essentially, the ROI project is intended to ensure that the United States receives an improved return on investment with respect to public funding for research and development.  The Green Paper includes stakeholder data identifying potential issues as well as proposals to improve the technology transfer process.  For example, the Green Paper on stakeholder data states:

Return on Investment Initiative – Summary of NIST’s Findings Based on Input from Stakeholders

Strategy 1 Identify regulatory impediments and administrative improvements in  Federal technology transfer policies and practices

Government Use License: According to stakeholders, the scope of the “government use license” is not well defined

March-In Rights: According to stakeholders, the circumstances under which the government may appropriately exercise march-in rights to license further development of an invention to achieve practical application are not clear

Preference for U.S. Manufacturing: According to stakeholders, existing statute supports the preference for U.S. manufacturing but the process to obtain a waiver is confusing 

Copyright of Software: According to stakeholders, the “Government Works” exception to copyright protection for software products of Federal R&D at Government-Owned, Government-Operated Laboratories constrains commercialization

Proprietary Information: According to stakeholders, an expanded protection period for proprietary information under a Cooperative R&D Agreement would encourage greater collaboration with Federal Laboratories Strengthen Technology Transfer at Federal Laboratories: According to stakeholders, updates to policies and practices under the Stevenson-Wydler Act could be simplified

Presumption of Government Rights to Employee Inventions: According to stakeholders, the process to determine a present assignment of invention rights by Federal employees to the Federal Government is overly burdensome

Strategy 2  Increase engagement with private sector technology development experts and investors

Streamlined Partnership Mechanisms: According to stakeholders, improved clarity and use of best practices government wide would streamline agreements and ensure greater transparency for R&D partners 

Expanded Partnership Mechanisms: According to stakeholders, private sector investment for translational R&D and technology maturation could be increased through expanded partnership agreements and nonprofit foundations

Technology Commercialization Incentives: According to stakeholders, recipients of Federal funding could benefit from a limited use of R&D funding awards to enable intellectual property protection 

Strategy 3 Build a more entrepreneurial R&D workforce

Technology Entrepreneurship Programs: According to stakeholders, expanding technology entrepreneurship programs at Federal R&D agencies government-wide will help build a more entrepreneurial workforce

Managing Conflicts of Interest: According to stakeholders, current requirements for managing conflicts of interest pose challenges to build a more entrepreneurial R&D workforce Strategy

Strategy 4 Support innovative tools and services for technology transfer

Federal IP Data Reporting System(s): According to stakeholders, a secure, modern platform is not available for reporting data on intellectual property resulting from Federal R&D

Access to Federal Technologies, Knowledge, and Capabilities: According to stakeholders, a federated data portal is not available to easily access, use, and analyze information on federally funded technologies, knowledge, and capabilities that are available to the public

Strategy 5 Improve understanding of global science and technology trends and benchmarks

Benchmarking and Metrics: According to stakeholders, current metrics to capture, assess, and improve broad technology transfer outcomes and impacts based on federally funded R&D and underpinning operational processes are inadequate

The Green Paper contains discussion and findings on all of the strategies and subpoints.  For example, on the government manufacturing clause:

NIST Finding 1.  According to stakeholders, the scope of the “government use license” is not well defined. Market uncertainty is created by the lack of a clear definition of “government use” that is limited to use directly by the government—or a government contractor in the performance of an agreement with the government—for a government purpose only, including continued use in research and development by the government. The scope of the government use license should not extend to goods and services made, sold, or otherwise distributed by third parties if the government—or a government contractor in the performance of an agreement with the government—does not directly use, provide, or consume those goods and services.

On using “march in rights” as a form of price control, the Green Paper notes:

Stakeholders pointed to potential consequences from using march-in rights as a price control. These reasons include impeding the creation of new drugs and discouraging university and medical school licensees from making the substantial additional investments necessary to develop and commercialize new drug discoveries. A 2019 report from the Information Technology and Innovation Foundation drew similar conclusions, noting that “[m]isusing the “march-in right” provision of the Bayh-Dole Act could negatively impact U.S. life-sciences innovation and result in fewer new drugs.”67 Other responses focused on ensuring that new drugs reach the people that helped fund work through Federal basic research.

The finding on “march in rights” states:

NIST Finding 2. According to stakeholders, the circumstances under which the government may exercise march-in rights are not well-defined. Market uncertainty is created by the lack of a clear definition of the use of march-in rights that is consistent with statute, rather than as a regulatory mechanism for the Federal Government to control the market price of goods and services.  

The Green Paper also notes that stakeholders are very concerned about the inconsistent and poor approach by the Federal Government to the protection of trade secrets, which puts a damper on collaboration between the public and private sectors.  On page 121-125, there is a summary chart of strategies and findings, including an indication whether the solution should be legislation, regulation or both.  The Green Paper is available, here. 

A Closer Look at CRISPR Patents and Licensing: A More Nuanced Approach

Professors Jorge Contreras and Jacob Sherkow recently published an article on February 17, 2017, titled, "CRISPR, Surrogate Licensing and Scientific Discovery: Have Research Universities Abandoned Their Public Focus," in Science.  The authors examined the publicly available licenses between the research institutions and "spin-off" companies which include one of the principal researchers (the spin-off companies are called "surrogates" by the authors).  The authors believe that an apparent "bottleneck" exists with respect to some of the exclusive field of use licenses granted to surrogates which may result in underuse of the technology ultimately harming innovation.  This is, in part, because the surrogates may not be best positioned to utilize the technology under some of the broader fields of use that are exclusively licensed.  The authors note that a "platform technology" such as CRISPR should be broadly accessible and provide some suggestions for future licensing.  The authors also point to how the research institutions have attempted to make the technology available as a tool although without the rights to "market and develop products derived from their research."  This paper is three pages long and well-worth a read. 

US Senate Candidate in California Critical of Bayh-Dole Act

Michael Eisen, a geneticist at University of California, Berkeley, has written a blog post concerning the CRISPR dispute, the Bayh-Dole Act and academic science.  Notably, Dr. Eisen is running for the U.S. Senate in California.  Dr. Eisen is essentially critical of the Bayh-Dole Act for skewing incentives toward commercially valuable research, complicating accessing research, slowing the progress of research and creating incentives for researchers to “behave badly.”  Here is an excerpt from his post:

Academic science is, after all, largely funded by the public. By all rights discoveries made on with public funds should belong to the public. And not too long ago they did. But legislation passed in 1980 – the Bayh-Dole Act – gave universities the right to claim patents on inventions made by their researchers on the public dime. Prior to 1980 these patents belonged to the federal government and many languished unused. The logic of Bayh-Dole was that, if they owned patents in their work, universities and other grantees would be incentivized to have their inventions turned into products, thereby benefiting the public.

But this is not how things worked out. Encouraged by a small number of patents that made huge sums, universities developed massive infrastructure to profit from their researchers. Not only do they spend millions on patents, they’ve turned every interaction scientists have with each other into an intellectual property transaction. Everything I get from or send to a colleague at another academic institution involves a complex legal agreement whose purpose is not to promote science but to protect the university’s ability to profit from hypothetical inventions that might arise from scientists doing what we’re supposed to do – share our work with each other.

And the idea that this system promotes the transformation of inventions made with public funding into products is laughable. CRISPR is a perfect case in point. The patent battle between UC and The Broad is likely to last for years. Meanwhile companies interested in actually developing CRISPR into new products are stymied by a combination of a lack of clarity about with whom to negotiate, and universities being difficult negotiating partners.

It would be so much easier if the US government simply placed all work arising from federal dollars into the public domain. We have a robust science and technology industry ready to exploit new ideas, and entrepreneurs and venture capitalists eager to fill in where existing companies are uninterested. Taxpayers would benefit by allowing the market, and not university licensing offices, to decide whose ideas and products make the best use of publicly funded inventions.

And most importantly we all would benefit returning academic science to its roots in basic discovery oriented research. We see with CRISPR the toxic effects of turning academic institutions into money hungry hawkers of intellectual property. Pursuit of patent riches has transformed The Broad Institute, which houses some of the most talented scientists working today, into a prominent purveyor of calumny.

Association of University Technology Managers Releases FY 2015 Highlights Report

The Association of University Technology Managers (AUTM) has released a Highlights report concerning its FY2015 annual survey.  The results of the survey are promising.  For example, there was a 15% increase from the prior year of licenses and options executed.  An almost 15% increase in new patent applications filed.  Over an 11% increase in the number of start-ups created.  And, a 5% increase in both research expenditures and invention disclosures.  I am not too excited about using patent applications and grants as a metric for technology transfer success, but the licenses, options, number of startups and research expenditures is positive.  Moreover, the supposed increase in using consultancy agreements and licensed know-how divorced from patents by technology transfer offices may point to even more actual technology transfer happening from university to the private sector.  (I am assuming the reported licenses and options are associated with patents.) 

The Highlights further states that 879 new products have been introduced to the market and $28 billion “in net sales from new products” has been realized.  Interestingly, 785 of the 1,012 startups were formed in the research institution's home state.  Importantly, $2.5 billion in licensing income was collected which is 28.4% more than the prior year.  It would be interesting to see that $2.5 billion number broken down by patent and product/service (for a critique of using revenue generated as a metric of technology transfer success, see here).  AUTM notes that 3.8 million jobs have been created as well as 153 new drugs and vaccines on the market “because of the Bayh-Dole Act.”  There was about a 65% response rate to the survey—202 of 308 institutions participated. 

Redistribution of Wealth Through Giving and the Bayh-Dole Act

A couple of years or so ago, I wrote a post on philanthropy and its impact on the creation of intellectual property.  This appears to be an under-researched area and deserves some additional review. 

The Bayh-Dole Act (and general U.S. federal policy) operates to redistribute wealth from tax payers to universities, non-profits and companies through their ability to take title to government funded inventions.  Essentially, tax payers pay money to the government.  Instead of that money getting redistributed through social programs or other means, the money is distributed in the form of grants for research to universities, non-profits and companies.  The Bayh-Dole Act then allows those entities to take title to any inventions developed from that money.  Part of the rationale for the Bayh-Dole Act, along with the incentive to commercialize theory, is to ensure that private industry has the incentive to bring government funded technology to market--to cross the so-called "valley of death".  As the story goes, prior to passage of the Bayh-Dole Act, many government funded inventions "languished" on the shelf of the government. Many believe the Bayh-Dole Act is an inspired piece of legislation.  Indeed, many countries around the world have passed similar laws to harness the power of government funded invention. 

Interestingly, the Association of University Technology Managers (AUTM) pointed to a potential silver lining, of sorts, in the Great Recession.  Universities continued to spin out companies (and apparently create good paying jobs) based on university developed technology during the Great Recession.  If not for the Bayh-Dole Act, the Great Recession might have been much worse for the United States. 

I was listening to National Public Radio (NPR) the other day and noticed that the Lemelson Foundation was supporting NPR.  The Lemelson Foundation was started by Dorothy Lemelson, the famous inventor Jerry Lemelson's wife.  The Foundation supports invention and commercialization efforts primarily through education in the United States and in other countries.  Specifically, the Foundation appears to focus on college-aged possible inventors and addressing the needs of the poor through invention.  The Foundation reached its 20th anniversary this year and there is an interesting list of its achievements and activities, here. 

Notably, Jerry Lemelson was well-known for his patenting/invention activity--over 600 patents.  He was also well-known for his assertion of patents (submarine patents as they were known) against practicing companies, particularly for his "scanner" technology.  Interestingly, Wikipedia notes that he extracted about $1.3 billion in licenses from companies.  When examining the merits of a particular practice--let's say so-called patent trolling, perhaps we should also look to the uses that some monies made from that activity are used, including voluntary redistribution. 

The Pharmaceutical Pricing Problem: A Call to Exercise Bayh-Dole Act March-In Rights Heard?

The United States is struggling with the high cost of healthcare.  Notably, one cause of the high cost is the price of pharmaceuticals.  The importance of the issue and the pressure is exemplified by the focus of the various presidential candidates.  Not only are the Democratic candidates Bernie Sanders and Hilary Clinton concerned, but so is Republican candidate Donald Trump.  Interestingly, California, through an initiative, may directly confront pharmaceutical pricing for many Californians. 

One critique of the current system is that many pharmaceuticals were developed using government funding.  Thus, at least partially, the development costs to create a pharmaceutical may have been borne by the public.  Then, the argument goes, the public must pay again (in many cases) through the supra-competitive price set by a pharmaceutical company because of a patent. The public essentially pays twice for the pharmaceutical.  The Bayh-Dole Act essentially allows this to happen.  However, the counter argument has been that without the patent private industry would be unwilling to invest in commercializing the invention.  We would end up with the pre-Bayh-Dole Act problem—inventions languishing on the government shelf.  The government, through the Bayh-Dole Act, does retain some rights in government funded inventions.  One such right is the ability to exercise march-in rights.  March-in rights can be exercised in the following situations:

(a) With respect to any subject invention in which a small business firm or nonprofit organization has acquired title under this chapter, the Federal agency under whose funding agreement the subject invention was made shall have the right, in accordance with such procedures as are provided in regulations promulgated hereunder to require the contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the contractor, assignee, or exclusive licensee refuses such request, to grant such a license itself, if the Federal agency determines that such-- 

(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;

(2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; . . . .

Section 201 in 35 U.S.C., subsection (f) defines “[t]he term “practical application” [to] mean[] to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.”  Part of the problem is defining what are “reasonable terms.” Some scholars have rejected arguments that “march-in” rights should include concerns with pricing.  Additionally, the argument against the exercise of “march-in” rights is that the uncertainty interjected into the ordinary process of the Bayh-Dole Act would provide a disincentive for private industry to invest in the commercialization of Bayh-Dole Act funded inventions.  To date, March-in rights have never been exercised. 

Notably, over 50 congresspersons sent a letter to the Director of the National Institutes of Health [NIH] requesting that the NIH issue guidelines defining when “march-in” rights should be utilized.  The belief is apparently that the existence of guidance may provide an incentive for pharmaceutical companies to set prices “reasonably” because of fear of the actual exercise of rights.  Apparently, right now, the belief is that they will never be exercised. On March 16, in congressional hearings, BNA reported that the Director of the NIH noted that they are “open” to exercising the rights.  Will the indication of “openness” to exercise rights cause the pharmaceutical industry to pause before setting the price of a government funded pharmaceutical?  Is current pressure from presidential candidates and from a state like California enough to rethink the setting of the price of pharmaceuticals? 

UCLA to Receive Over $500 Million for Royalty Rights in University Developed Invention

This is supposed to be a “record breaking” deal for a University of California developed technology that was transferred to industry.  The invention is the prostate drug Xtandi.  UCLA’s Chancellor Gene Block stated:

Xtandi is the result of a unique collaboration between researchers from various academic units across campus and an outstanding example of basic science leading to a therapy that is bringing extraordinary benefits to prostate cancer patients worldwide.  By selling future royalty rights to Royalty Pharma, we are strategically supporting one of our essential missions — funding and generating research with practical applications that serve the public good. Facilitating equal access to education also is a campus priority, and we will use a portion of the sale proceeds to support scholarships and fellowships.

Wow!  Talk about a dream deal for UCLA.  I am sure that every technology transfer office in the world and supporter of the Bayh-Dole Act generally will point to this deal as justifying all of the changes that the Bayh-Dole Act may have brought to academia.  Notably, the press release states that federal funding for research has been declining and, here, technology transfer is not only helping with more research funding, but also supporting scholarships and fellowships.  It is hard to argue with $500 million.

The press release also notes that:

By selling the royalty interest and prudently investing proceeds, UCLA seeks to provide stability and minimize risk associated with the volatility of the pharmaceutical industry marketplace.  UCLA will hold its share of the proceeds in a broadly diversified portfolio managed by the University of California’s office of the chief investment officer. Based on the pool’s average annual returns, UCLA anticipates it will receive approximately $60 million annually until 2027.

Not a bad idea for sure.   I found this statement in the press release particularly interesting: “UCLA has no role in the marketing or sale of Xtandi.”  Is that UCLA’s way of stating that they are not responsible for the pricing of the drug (and the amount of money spent on marketing)?  The other way to look at this is to say that the public may be paying for the invention twice.  But again, would we have had it or not?  I have to say that I am happy for the good news for UCLA and that there is a successful drug for treatment of prostate cancer. And, congratulations to Westwood Technology Transfer!  (Hat Tip to Technology Transfer Central)

The Push and Pull of the Biotechnology Startup on the Academic Researcher: A Case of Altering The Traditional Norms of the Republic of Science

In a fascinating story published by the Sacramento Bee authored by Cathie Anderson titled, “UC Davis Cancer Researcher Weighs Risk of Leaving Campus Against Reward of Cutting-Edge Startup,” Ms. Anderson discusses some of the pros and cons of leaving a researcher position at a public university to pursue a high level position at a startup.  The article discusses how Mr. Degregorio, a UC Davis researcher, has been involved in the development of promising drugs to address cancer in the immunotherapy field.   Mr. Degregorio is receiving pressure from his investors in the company and his research partners to completely disengage from the university and essentially work full-time for the startup.  Apparently, the pressure stems from a desire to have Mr. Degregorio fully invested in the startup and fully assuming the associated risk.  From Mr. Degregorio’s, who is 60 years old, position, he has apparently worked long enough to retire from UC Davis with a full pension which seems to cover his full current pay and his family will have medical benefits.  Why is he concerned with staying on at UC Davis? He apparently believes that:

Academia, however, offers . . .  the freedom to study potential drug treatments without worrying about whether his research delivers dividends. In the private sector . . . failure could mean that he loses a high-profile position at the company he founded.

He also expresses concern about how biotechnology stocks have recently been hit hard and the timing may not be great.  The latter concern seems to be a very real concern to me.  The first concern is very interesting and, I think, highlights the divide between a benefit in academia—freedom of research agenda, even if for applied research—versus pressure to research and develop drugs that must be commercially successful.  There is still pressure though in academia to do “relevant” and “successful” research because of the need to continue to obtain research grants, but the freedom to choose remains and perhaps the thought of being fired is unbearable to some.  It is especially interesting that as a researcher he feels this tension even in light of the fact that he would not lose the security of his pay and medical benefits at UC Davis.  But, what if he was not fully vested in his pension?  I suppose that at least for Mr. Degregorio he would not make the decision to leave.  What about other researchers in a similar position?  I wonder how highly they would value their academic freedom and potential pension weighed against the opportunity to make a killing in the high risk biopharmaceutical startup field. 

Another interesting issue is the role of patents.  The article notes that Mr. Degregorio has worked closely with the UC Davis Technology Transfer Office to ensure that all necessary patents rights have been acquired.  Likely without the Bayh-Dole Act and patent protection, the possibility of this startup existing, the startup potentially receiving $6 million in venture capital funding (and the article notes they need more funding for further development and to get through clinical trials), and Mr. Degregorio having to make a tough decision for him, would not exist.  But, what if the Bayh-Dole Act did not exist?  Would we still have the invention?  Would it be cheaper?  Would it reach the marketplace eventually—crossing the Valley of Death?

A Very Good Resource on the Bayh-Dole Act and Commercialization

In the last few weeks, I have had the opportunity to refer folks to a book on the Bayh-Dole Act and technology transfer.  The excellent book is the late Syracuse University Law School Professor Theodore Hagelin’s Technology Innovation Law and Practice casebook published in 2012.  The book has a very nice treatment of the Bayh-Dole Act and coverage of the legal concerns from taking a product from the laboratory to market.  The book is available from Lexis Nexis, here, and Amazon, here.  Professor Hagelin was the founder and Director of the very successful Technology Commercialization Law Program at Syracuse University College of Law; Director of the New York State Science and Technology Law Center; Crandall Melvin Professor of Law; and Kauffman Professor of Entrepreneurship and Innovation.  A description of his accomplishments can be found, here. 

Here is the publisher’s description of the book:

This book is a comprehensive collection of cases, statutes, regulations and readings focused on the commercial development of new technologies, primarily by start-up and early-stage companies. It defines the technology innovation process as the set of decisions and actions by which an invention is transformed from a laboratory prototype into a commercially viable product or process; and defines the technology innovation period as the time between the point of invention (reduction to practice) and the point of market introduction.

Technology Innovation Law and Practice addresses the gap in academic attention paid to the field of technology innovation. The book provides students, faculty and practitioners, both in law and other disciplines, with a single source of in-depth information on the laws that affect the technology innovation process. The book is unique in its interdisciplinary focus, in its emphasis on start-up and early-stage technology companies, and in its combination of instructional and reference materials.

Measuring the Success of Technology Transfer Offices (and the field)

There is a glaring critique of the university technology transfer enterprise and perhaps the underlying Bayh-Dole Act in the United States.  That critique is based upon the fact that many university technology transfer offices fail to bring in enough funding through licensing or other activities to cover their own costs let alone make money for the university.  Indeed, only a handful of U.S. universities appear to make substantial amounts of revenue.  An additional criticism of the university technology transfer field generally has been that technology transfer offices (and really, the administrators above them) have been too focused on using revenue generated as a metric for success.  This focus arguably can distort the universities’ general mission directed to the public good, including skewing the incentives for academics.  For example, academics can be pushed to adopt research agendas focused on solving practical problems instead of engaging in basic science, which may ultimately have broader public benefits.  At the confluence of these two critiques is the issue of what should be the proper metric(s)for judging success for the technology transfer office and the field in general.  For sure, U.S. universities are feeling the “pinch” of less government monies for research and are looking for alternative funding sources, such as crowdfunding for academic research.  However, even with that pressure, adminstrators and faculty should judge the success of their technology transfer office based on criteria that flow from the mission of the university and that are aligned with its objectives.  So, when is it a success or not?  What are the right metrics?

Valerie Landrio McDevitt, Joelle Mendez-Hinds, David Winwood, Vinit Nijhawan,Todd Sherer, John F. Ritter, and Paul R. Sanberg, have authored a paper titled, “More than Money: The Exponential Impact of Academic Technology Transfer.”  The paper sets forth the benefits of technology transfer beyond revenue alone and perhaps provides the starting point for the development of additional metrics to judge the success of technology transfer offices.  Here are the benefits described by the authors:

Revenue generation

Unrestricted funds to institution from license income

Direct personal financial benefit to inventors and authors

Increased opportunities for funding

Eligibility for funding by compliance with federal regulations requiring a technology transfer program

Increased opportunities for interinstitutional and interdisciplinary grants

Outreach, licensing, and facilitation of new startups yield new funding partnerships

Increased opportunities for funding sources requiring a commercial partner, for example, SBIR and STTR

Facilitates establishment of international research relationships

Promotes a culture of entrepreneurship and innovation

Successes increase university brand and prestige

Enhances university fundraising efforts

Opportunities to strengthen donor ties by engagement with startups

Positively factors into high level recruitment efforts

Positively affects retention of high-producing and high-potential faculty

Student success

Provides opportunities to participate in real world translational research

Provides exposure to the process of obtaining intellectual property protection

Strengthens prospects of finding jobs and being successful

Public benefit

Fulfills the university’s larger missions to address social, medical, environmental, or technical problems

Improves the quality of life

Economic development

Revenue from university licensing positively affects the US economy

Brings money into the state or region

Aids in the retention of local talent

New university startups create high-wage jobs

It may be difficult to measure some of these “benefits.”  But, what do you think of some of these as potential metrics?  For sure, some of the most beneficial programs often bring to the table attributes that are difficult to measure.  And, surely, metrics such as revenue generation, invention disclosures, patents granted, patents applied for, patents licensed, number of start-ups and other traditional metrics still have some place in the game.  (Hat tip to Technology Transfer Tactics for a lead to the paper.)