Bayh-Dole Reform and the Progress of Biomedicine
By Arti K. Rai
(Duke) and Rebecca S. Eisenberg (Michigan),
66 Law and
Contemporary Problems 289 (2003)
FULL
TEXT
Summary
Most analysts agree that proprietary activity in early-stage, or upstream, biomedical research has grown dramatically since the early 1980s. Patent statistics and reports from the research community show that innovators increasingly face restrictive licensing and material transfer agreements when they seek access to research tools. This shift in patenting and licensing practices stems from a variety of factors, including the shrinking conceptual gap between basic invention and commercial application, the liberalization of patenting standards by the courts, and, most important, the Bayh-Dole Act of 1980, which encourages universities and other recipients of federal research funds to patent their discoveries.
The authors of this paper argue that increases in upstream proprietary claims threaten future biomedical research. Most obviously, they constrain access to discoveries that might otherwise be broadly disseminated in the public domain. Second, the owners of upstream patents often gain control over subsequent research across a broad range of related problems. As Robert Merges and Richard Nelson, among others, have shown, broad patents on foundational work have often hindered progress in a variety of emerging industries by creating prohibitive transaction costs. Third, a proliferation of patents owned by many different entities can also drive up these transaction costs. Empirical inquiry into contemporary biomedical research (Walsh et. al, 2003; Campbell et al., 2002; Eisenberg, 2001) has so far been inconclusive on the precise degree to which patent holdups have blocked commercialization. It has, however, uncovered cases where requests for data and materials were denied, where costly negotiations and even litigation held up research, and where the existence of patent rights steered researchers away from entire lines of inquiry.
The authors argue that efforts to address these problems by changing the patent laws must be sensitive to the significant role that patents play in motivating private investment in biopharmaceutical R&D. Patents on finished products have always been critical in drug development. In addition, upstream patents may well play a role in attracting venture capital to fledgling companies that create research platform technologies. Given how sensitive firms in this industry are to patents, adjustments in general patentability standards may prove difficult to calibrate.
The concern about undermining incentives for investment loses much of its force, however, in the case of federally-funded research. Here, public funding plays some of the role ordinarily played by patents. It is therefore desirable that decisions about patenting the results of government-sponsored projects be made on the basis of a careful balancing of the costs and benefits that such patenting will entail for future R&D. The Bayh-Dole Act currently entrusts these decisions completely to the discretion of institutions (such as universities) that receive federal funds. The authors argue that these institutions may have little reason to consider the social costs of their proprietary claims when they decide what to patent, and that research sponsors like the National Institutes of Health may have a more appropriate combination of knowledge and incentives to make these judgments in the public interest. The authors propose specific changes to the Bayh-Dole Act that would give agencies like the National Institutes of Health the opportunity to overcome the law’s bias toward university patenting. These changes would draw on and reinforce collective efforts already undertaken by some publicly-funded scientists to put biological information in the public domain. (Rai, 1999)
References
Eric G. Campbell et al., Data Withholding in Academic Genetics: Data from a National Survey, 287 JAMA 473 (2002)
Rebecca S. Eisenberg, Bargaining Over the Transfer of Proprietary Research Tools: Is This Market Failing or Emerging?, in Expanding the Boundaries of Intellectual Property: Innovation Policy for the Knowledge Society 226 (Rochelle Dreyfuss et al. eds., 2001)
Robert Merges and Richard Nelson, On the Complex Economics of Patent Scope, 90 Columbia Law Review 832 (1990)
Arti K. Rai, Regulating Scientific Research: Intellectual Property Rights and the Norms of Science, 94 Nw.L.Rev. 77 (1999)
John Walsh et al., Effects of Research Tool Patents and Licensing on Biomedical Innovation, in Patents in the Knowledge-Based Economy (National Research Council, 2003).
