When should universities patent?

I spoke today about university patenting to the Yale Student Science Diplomats, a group of science graduate students who are interested in science policy issues. It was great to have a chance to engage with scientists about why we allow universities to file patents on federally funded research (which they are permitted to do under the Bayh-Dole Act), and what those justifications tell us about when public-minded universities should be filing patents. As I discuss in my YLJ Comment, patents are not needed to motivate university researchers to innovate or to disclose their inventions—university researchers were innovating and publishing their results long before Bayh-Dole, primarily out of a desire for prestige (and the resulting tenure and prizes). The most compelling justification for Bayh-Dole patents is commercialization theory, the idea that exclusive patent rights are necessary to bring inventions to market. This theory is more convincing for inventions like pharmaceuticals with high regulatory barriers and low imitation costs, but it does not make sense when the exclusive patent right is unnecessary for commercialization—something that is very difficult to determine.

The Bayh-Dole Act currently allows agencies to limit grant recipients' rights under the "exceptional circumstances" that such limitation "will better promote the policy and objectives" of the Act (the first of which is "the utilization of inventions arising from federally supported research"), and it also allows agencies to exercise "march-in rights" to require compulsory licenses after a patent is granted, but both interventions have been rare and ineffective. It is also unrealistic to expect universities themselves to only patent or grant exclusive licenses when necessary for commercialization, both because the incentives of university technology transfer offices are generally misaligned with the public interest, and because of the difficulty in determining when an exclusive patent license is actually necessary for commercialization.

One of the articles I'm working on, tentatively titled Ex Ante March-In Rights: A Market Test for Bayh-Dole IP, argues that this difficulty could be solved through a "market test" requirement for federally funded inventions. Universities and other federal grant recipients would be required, before exclusively licensing these inventions, to offer each invention under a nonexclusive license for free (or a small fee to cover patent prosecution costs). If a company is willing to develop the invention under a nonexclusive license, an exclusive license would be contrary to the public interest. The article will explore how this market test requirement should be structured and how due diligence milestones and other contractual provisions can be used to prevent gaming. Suggestions from readers, especially those involved in university tech transfer, are very welcome!

As for implementing this market test requirement, it could obviously be accomplished by new legislation, but I also argue in my YLJ Comment that agencies could use their ex ante control over who gets grants to nudge universities toward more socially responsible patenting and licensing policies. This does not mean that universities should dictate licensing terms ex ante; I suggest things such as adding examples related to licensing to things that qualify for "broader impact" on NSF grants, which I think would make many more university researchers pay closer attention to what their technology transfer offices are doing.

Yale is one of the original signatories to both the 2007 Nine Points to Consider in Licensing University Technology and the 2009 Statement of Principles and Strategies for the Equitable Dissemination of Medical Technologies—although in the latter Yale committed to "develop and apply meaningful metrics to evaluate the success of our efforts to facilitate global access" and to "[r]evisit these principles on a biennial basis," and I have not heard anything about how Yale has moved forward with these commitments. I think it would be great if more Yale scientists engaged with Yale's Office of Cooperative Research about the motivations behind their patenting and licensing strategies!