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Breaking the Law That Led to 7,739 Patents and 1,000 Startups in 2022 Alone

 

By James Edwards, Conservatives for Property Rights

The Biden administration is out to break the law. It’s proposed a framework for federal agencies to impose “march-in” rights on patented inventions that stem from federally funded research.

Draft interagency guidance pushes novel policy—basing march-in on the price of a product related to a university’s or small business’s patent tied to federal research dollars. Nothing in the Bayh-Dole Act of 1980 authorizes such a consideration.

To be clear, the wildly successful, innovation-fostering Bayh-Dole contains no reference to prices of eventual products in connection with the law’s march-in provision or anything else.

March-in focuses on ensuring an invention’s commercialization, adequate supply during public health crises and domestic manufacturing of these products when possible. The law’s authors, Senators Birch Bayh (D-Ind.) and Bob Dole (R-Kan.), intentionally omitted eventual products’ price from this very narrow set of extraordinary circumstances for which march-in is lawfully permitted.

But the Departments of Commerce and of Health and Human Services are colluding to shoehorn eventual product price as rationalization for the government to “march in” on patents that underlie those products. This would clearly violate the statute’s plain language and end-run Congress’s legislative authority.

This scheme contains no definition of “reasonable pricing,” giving every government agency broad discretion to make up its own “definition.” Each agency deciding its own intellectual asset management practices was one of the problems Bayh-Dole solved, but would be revived.

Further, the administration touts price-based march-in to lower drug prices. But a Vital Transformation study reports 90 percent of pharmaceuticals would be ineligible for march-in rights under the proposed framework. 

For most drugs, any Bayh-Dole invention’s patent is just one of several patents. The other inventions are made during product development—funded by private investment and out of march-in’s reach. Enabling march-in over price won’t reduce drug prices, just biopharmaceutical innovation.

Moreover, the guidance would apply to every federal agency and every type of technology. Anyone may petition for march-in. That combination threatens public-private collaboration. Federally funded IP becomes toxic, as in the 1990s with National Institutes of Health licensing agreements.

The heightened prospect of march-in depriving exclusive IP rights will scare off venture capital and private engagement with important technologies like semiconductors, advanced materials, agriculture and quantum computing. The proposal undermines the goals of the CHIPS and Science Act, Biden’s Cancer Moonshot, ARPA-H and the Executive Order on Advancing Biotechnology and Biomanufacturing Innovation.

Price-based march-in threatens small businesses’ inventions made under Small Business Innovation Research and Small Business Technology Transfer programs, also covered by Bayh-Dole. This puts small businesses’ existence at risk.

This isn’t the Biden administration’s first attempt to violate the Bayh-Dole law by injecting product price into march-in. Political appointees at the National Institute of Standards and Technology twisted the Trump administration’s Return on Investment initiative into a means for marching in on patents on the grounds of product price.

American voters disagree—strongly—with politicians messing up the landmark Bayh-Dole Act. A survey by Morning Consult found:

  • 77% of voters fear the use of the Bayh-Dole Act as a price control could lower their access to innovative treatments for diseases like cancer, Alzheimer’s and rare diseases;
  • 85% view it as important that policymakers protect Bayh-Dole—54% considering it “very important;”
  • 91% of Democrats say it’s important to protect this law;
  • Voters are twice as likely to support a candidate who’ll protect Bayh-Dole, over a candidate who’d significantly change it;
  • Voters widely agree that government-private sector collaboration in bringing cutting-edge inventions to market, coupled with protecting those inventions from government expropriation, results in American scientific leaderships.

The Bayh-Dole Coalition tweeted a warning on X of the harmful consequences misuse of march-in will cause: “If the @CommerceGov @HHSGov Bayh-Dole working group suggests that price can be a factor in march-in decisions, investments in next-gen R&D across all economic industries will plummet and we’ll see fewer treatments/cures. Get the facts on march-in here: https://buff.ly/3XbUQBv.“

Bayh-Dole has yielded four decades of practical benefits from otherwise wasted government funds. Since 1996 alone, this remarkable law has fostered half a million inventions and more than 126,000 patents. It’s added more than $1.9 trillion in industrial output, 6.5 million jobs, 17,000 startup companies.

Before 1980, the zillions of taxpayer dollars poured into research merely advanced theoretical knowledge. Less than 5% of the inventions that came out of that spending was commercialized.

If federal agencies violate Bayh-Dole, turning it into a government doublecrossing mechanism, they will return America to wasting taxpayer money on useless—or unused—new knowledge. Such expropriation of patents only leads to faltering U.S. economic and national security and loss of our global innovative edge.

President Biden needs to get his administration on the right side of the Bayh-Dole Act and bolster—not destroy—innovation-fostering, secure patent rights.

 


James Edwards, Ph.D., is executive director of Conservatives for Property Rights (@4PropertyRights) and patent policy advisor to Eagle Forum Education & Legal Defense Fund.