The National Institute of Standards and Technology is completing something begun in 2018 under its Return on Investment Initiative. The ROI Initiative undertook examination of federal policies, practices and processes related to transferring technology to private-sector partners. Conservatives for Property Rights has filed comments on NIST’s final recommendations. Part of this review has focused on the Bayh-Dole Act.
The Bayh-Dole Act has now entered its 41st year, having marked a rare success story of a law that achieves what it set out to do. Bayh-Dole opened the floodgates for bringing inventions discovered under federal research funds to practical, commercial benefit. It makes the private property rights in patents an asset universities own and thus able to transfer the technology to attempt commercialization.
By 1980, federal research had amassed 28,000 federally owned patents. But the U.S. government applied command-and-control from Washington. Central government control’s failure is reflected in private-sector entities undertaking less than 5 percent of those patents to attempt commercialization for practical use.
Bayh-Dole put decisionmaking over tech transfer and commercialization in the hands of the many institutions whose patents the basic research produced. This clear title and predictability have yielded a boost of $1.7 trillion to the U.S. economy, 4.2 million new jobs, plus startups, patents and new products — and that’s just in the past 20 years of Bayh-Dole.
Fast-forward to NIST’s ROI Initiative. Most of its recommendations for revising the regulations for tech transfer stay true to Bayh-Dole’s property rights-centered foundation of its success. But one proposal would open pandora’s box.
It’s axiomatic that anything successful will be attacked by those set on weakening or destroying it. Activists who want federal tech transfer to dictate resulting products’ prices have for years tried to twist Bayh-Dole’s very narrow “march-in” rights provision into a government price control weapon.
It’s important to understand that the law’s authors decidedly rejected this. The bipartisan senators avered, “Bayh-Dole did not intend that the government set prices on resulting products. The law makes no reference to a reasonable price that should be dictated by the government. This omission was intentional . . . .”
In its latest iteration, NIST proposed revising its march-in rule as such: “March-in rights shall not be exercised exclusively based on the business decisions of the contractor regarding the pricing of commercial goods and services arising from practical application of the invention.”
CPR and many other commenters have objected to this phrasing. In trying to downplay pricing in considering whether to exercise march-in, the proposal strays from the statute. No where does the law authorize consideration of the pricing of commercialized tech transfer’s product — again, by intentional omission.
CPR and others discuss the lack of a statutory basis for mentioning price in its regulations, how this errs and veers from Sens. Bayh’s and Dole’s original intent, the great risk of upsetting the clear, reliable property rights Bayh-Dole democratized, the refusal of bipartisan administrations to use march-in based on pricing, and the National Institutes of Health’s “reasonable pricing” backfire in the 1990s. CPR points out that “the pricing reference . . . as proposed . . . is highly likely to have a chilling effect on private firms that otherwise want to pursue commercialization of federally funded inventions.” The NIST proposal directly threatens what have been secure intellectual property rights.
NIST has done a fine job with the ROI Initiative. Most of its recommendations are constructive. But the march-in proposal could really backfire even worse than NIH’s nightmare. If this provision remains in the finalized rule, Bayh-Dole’s brilliant success may dim.