We are often asked by readers how to explain Bayh-Dole commercialization’s importance to Members of Congress when they know so little about patent law or policy. As is always essential to conducting any successful sale it helps to begin with where the customer is. Most members favor federal research and development funding known as “R&D funding” This is an approach that has worked for us. For the past ten years, federal R&D grants have been level-funded at $130 and 140 billion annually. NIH typically receives about $30 billion. Most members appreciate and value the work of NIH whose job it is to convert that funding into economic and medical progress. After setting aside approximately 10% for its research, NIH distributes specific project financing to research institutions and universities for peer-reviewed competitive research proposals. Such grants for basic scientific research may run from 2 to 5 years. Grants include creating antidotes to “super bugs,” cures for cancer, diabetes and presently incurable diseases like Alzheimer’s. Such research may have a promising hypothesis but it is not yet proven or enough advanced to attract private sector development funding. The government begins the process through federal grants, but the bulk of the risk and expense of moving it from lab bench to bedside is assumed in the private sector. Here’s how:
For the past ten years, federal R&D grants have been level-funded at $130 and 140 billion annually. NIH typically receives about $30 billion. Most members appreciate and value the work of NIH whose job it is to convert that funding into economic and medical progress. After setting aside approximately 10% for its research, NIH distributes specific project financing to research institutions and universities for peer-reviewed competitive research proposals. Such grants for basic scientific research may run from 2 to 5 years. Grants include creating antidotes to “super bugs,” cures for cancer, diabetes and presently incurable diseases like Alzheimer’s. Such research may have a promising hypothesis but it is not yet proven or enough advanced to attract private sector development funding. The government begins the process through federal grants, but the bulk of the risk and expense of moving it from lab bench to bedside is assumed in the private sector.
Continue reading Draft NIH
Below is an excerpt from an outstanding Kevin Madigan essay summarizing the problems plaguing development investment in what was once our gold-standard US patent system. Madigan explains why development investment needed to commercialize US inventions and life science discoveries is now heading overseas. Madigan’s description of the situation is spot-on. His description of this alarming situation is spot-on, and his links are reliable and helpful. Lincoln’s famed reference to the investor’s “fuel of interest” supporting the inventor’s “fire of genius” poetically describes the commercialization process. More prosaically, after Congress appropriates its R&D funding, commercialization is where that federal funding rubber meets the road. This essay is about real statistics, sound reasoning and reliable links to opinions of patent policy experts. It demonstrates the economic importance of the Oil States case pending at SCOTUS and passage of the Coons/Cotton STRONGER Patents Act.
“Venture capital investment in the United States has declined steadily for years, as investors abandon an uncertain domestic climate for more reliable opportunities in foreign countries. In a report on the current state of the entrepreneurial ecosystem, the National Venture Capital Association emphasizes the extreme decline in the US share of global venture capital in the last twenty years, highlighting a drop from 83% of global share in 1996 to just 54% in 2015. At a time of decreasing investment, the US should be working to improve its innovation ecosystem, providing stable and effective property rights to inventors so that VCs can once again feel confident that investments in startups’ R&D—secured by patent rights—won’t just be stolen by established and better-financed infringers. Unfortunately, its doing just the opposite. Over the past decade, the US has continued to gut its patent system of the protections and incentives that attracted investment and made it the world leader in cutting-edge innovation in the first place.” Continue reading Investment Moving Overseas
There is much to report today. We will cover it as efficiently as possible.
TV talk show hosts and newscasters often appreciatively refer to their repeat guests as “friends of the show.” As it turns out Bayh-Dole has put on an impressive economic show over recent years. Now there are fresh numbers to prove it. I am sure readers would agree that the 36 yearlong B-D show’s indispensable and longest serving “friend of the show” is Joe Allen. In his IPWatchdog article today (see below), Joe lays out the recent new statistics you and your congressional delegation need to see. B-D was enacted with bi-partisan sponsorship and support. Because its public-private inventor/investor partnership commercialization dynamic is mainstream Republican in nature, its continued bi-partisan support is assured but only if R&D funding continues and otherwise uninvestable but needed basic research can be converted through private investment into jobs and economic development. His excellent article explains why congressional proposals to reduce R&D funding of basic research while weakening patent strength contradict common sense.
Three other notable links also are significant.
The excerpt below draws on a recent Techcrunch article confirming that China’s recent ascendency has made it a patent “powerhouse.”
“China is not only taking the spotlight in strong defense of global markets and free trade, filling a vacuum left by retreating Western capitalist democracies, China is quickly becoming a (if not the) global leader in intellectual property protection and enforcement. And there too, just as Western democracies (especially the United States) have grown increasingly skeptical of the value of intellectual property and have weakened protection and enforcement, China has been steadily advancing its own intellectual property system and the protected assets of its companies and citizens.”
The third significant piece is a recent Reuters article recounting the continuing conflict between SCOTUS and the CAFC which to no one’s surprise is adding increased uncertainty to patents’ predictable reliability. The fourth is another excellent IPWatchdog post that pointedly pins the efficient infringement tail driving all this court and congressional chaos on Apple’s donkey.
Continue reading A Busy Day
A Saturday New York Times editorial called to our mind an old saying: “If a turtle is perched on a fence post you know it didn’t get there by itself.”
With Congress now in recess and, when it returns, still entangled in health care, tax reform and Russia-gate, how is it that a high-priced, big tech PR firm would be trying to breathe life into patent litigation reform to justify its monthly retainer? No problem, just call in a favor and get a NYT editorial praising SCOTUS for its latest weakening of US patents. The editorial praised the recent SCOTUS decisions in TC Heartland v Kraft Foods and Impression Products v Lexmark under the headline, “Protecting Consumers in Patent Cases.” It was planted, we suspect, (like the turtle) on the Editorial Board’s patent troll narrative Kool-Aid cabinet shelf.
The Court in both decisions overturned years of patent law precedent on defendant venue in Heartland while in Lexmark it effectively held that any sale whatever or wherever of a patented product, including sales in other countries where our patent laws have no effect, cancels its US patent protection. One major problem is that when applied to existing arrangements such decisions have a retroactive impact. So if drug maker XYZ has made a discounted sale to the Gates Foundation of a patented anti-pandemic therapy for use in Africa, (even with a routine boilerplate restriction on further resales or other gray market activity) the US patent protecting the product is now automatically nullified. The Impression Products decision and the Court’s reasoning are explained in an IPWatchdog twin posts last week where experts comment on its “known unknowns.” As usual, however, the problem is the decision’s “unknown unknowns.” It appears to us that new uncertainties may further adversely affect investment in university life science research. It definitely will disrupt today’s biopharma innovation ecosystem.
Continue reading Turtle on a Fence Post
On the day the president’s budget was released this week 300+ medically engaged entities and associations nationwide, the backbone of our nation’s biomedical research ecosystem including many universities, disease advocacy groups, and medical centers, signed a full-page ad in the WSJ and POLITICO. Sponsored by “The Ad Hoc Group For Medical Research” and paid for by the Assoc. of American Medical Collages, its purpose was to thank Congress for its recent increased support for basic medical research. Ascribing US medical and economic strength to congressional bipartisan medical research, its content was straightforward and simple.
“When it comes to the Nation’s health
There’s One thing we can all agree on
Medical research Makes America Healthier and Stronger. ”
“LET’S KEEP THE PROGRESS GOING. INCREASE FUNDING FOR NIH BY 2 BILLION IN 2018.”
IP Strategic gratefully salutes this concerted effort to come to the rescue of NIH’s critical role in our life science innovation ecosystem.
Within our national health care ecosystem, NIH is the bridge between congressional R&D public investment in otherwise uninvestable life science and private sector development of its commercially promising results through Bayh-Dole directed commercialization. The ad’s focus is the NIH’s bridge’s on-ramp of congressional R&D funding. For the ecosystem to work the commercialization bridge’s off-ramp of private sector investment and development also must provide public benefit with its therapies, jobs and economic development. Off-ramp commercialization requires private sector investment which in turn requires reliable patent protection. Support and direction of commercialization bridge traffic flow is NIH’s mission. That bridging mission is undercut at its entry point by the Trump budget and effectively undermined at its exit point by patent uncertainties created by Congress, SCOTUS, and the USPTO. Here are just a few: Continue reading AAMC Acts Collectively to Rescue NIH’s Commercialization Mission
Economist Farhad Manjoo’s NYT column yesterday discusses public and private funding basic scientific research, a subject about which research universities and all US citizens should genuinely be concerned. Congress now funds basic research through annual R&D appropriations of $140 billion to grant agencies who distribute research grants in response to proposals for basic research. Under Bayh-Dole (B-D), promising discoveries may be patented, then commercialized through public-private partnerships that require fulfilling specific societal obligations. Research universities are appropriately concerned about the continued viability of today’s R&D funding dynamic. At a time when funding increases are needed, Trump has proposed R&D budget cuts and unfunded tax reform. And, to make matters more perilous, deficit-hawk budget concerns combine to jeopardize such funding.
Manjoo references the 60 billion annual expenditures of our five largest corporations commonly referred to as the “Frightful Five” (FF) — Alphabet, (Google) Amazon, Apple, Facebook, and Microsoft. Highlighting Google’s efforts “to inject machine intelligence into much of the global economy” he notes that total FF non-defense spending on AI and other basic science is exceeded by annual congressional spending on non-defense basic science research by a mere $9 billion! Add in other privately conducted research and the private sector is outspending the public sector on basic research. Manjoo’s article is non-judgmental. He even references to the joint op-ed by Google’s Erik Schmidt and MIT’s President Eric Lander urging more R&D spending (see my article here). But curiosity-riven basic research is non-investable but imperative to technological and biomedical progress. Corporate basic research is a very different animal.
Nevertheless, a likely take away by deficit hawks from the Manjoo article is that since funding basic science research is so prevalent in the private sector, why not move all of its there? He wonders what would happen if we eliminated our government’s investment in non-defense basic science relying exclusively on the private sector. He leaves the question unanswered but effectively asks why the government should pay for it if both are taking it in the same direction? We will surely hear this argument again. By themselves, the FF expenditures alone almost equalize it. Could our annual federal non-defense spending of $69 Billion be put to better use? The simple answer is a resounding “no.” Increased federal spending is crucial if research that does not offer an adequate return because of its nature (like antibiotics ) or doubtful patent durability (resulting from uncertainty). Research universities can not let such an elimination happen.
Read on to see what we know that Manjoo doesn’t.
Continue reading The Frightful Five
Whether the subject is Bayh-Dole price-based march-in or other government schemes to control the final pricing of privately developed products emergent from the commercially promising discoveries made possible by federally-funded life science research, Joe Allen knows what he is talking about. NIH’s mission is to see to the commercialization of such discoveries so they can become available to the public that invested in it through congressional R&D appropriations. Such curiosity-driven basic research is otherwise uninvestable. What cannot be commercialized cannot become available. This disconnect will lead to the further diminution of R&D funding for such research. However well-intended, governmentally imposed price controls deter private sector for-profit investment. This is not a theory. It is a historical fact confirmed by CRADA pricing experiment explained by Joe in his article below. Fast forward to the present. Joe’s conclusions are being confirmed now. The private sector investment withdrawals triggered by SCOTUS’ Mayo and Myriad decisions is happening now. These Sec 101 eligibility judicial missteps have created unacceptable uncertainty, not only in the life science areas treated in the actual decisions but regarding all life science “discoveries” the examiners and Courts are declaring unpatentable. Life science commercialization has never been more needed. It has never been more perilous.
As Joe Allen explains below there are better ways to skin drug pricing’s cat than crippling life science investment in applied development that is definitionally different than the hoped for curiosity-driven discoveries that made its profit-directed development possible.”Many in Congress want to impose price controls on medicines that result from
“Many in Congress want to impose price controls on medicines that result from federally funded research. We’ve tried this before, and it nearly brought medical research and development to a halt. Lawmakers aren’t wrong to want to lower drug prices, but they should find a strategy that isn’t a proven failure. These policies would have terrible ramifications for the future of National Institutes of Health-supported research and development while harming those suffering from the ravages of disease.Responding to congressional pressure in 1989, NIH officials incorporated a form of price controls known as a “reasonable pricing” clause in its licensing agreements. In short, they didn’t want to let private firms build upon publicly funded discoveries to commercialize resulting products unless the government had a say in pricing decisions. Their actions were well-intentioned. By placing conditions on medical patent licensing agreements, they hoped to decrease drug costs for consumers. But the results were disastrous.”
Here is Joe’s Fierce Healthcare article.
Our life science innovation ecosystem connects curiosity-driven basic science with its profit-driven private sector development and distribution. Its commercialization bridge has two other keystone components, its R&D on-ramp, and its private sector off-ramp. Politico reports that earlier this week, a high-level White House discussion was held by with President Trump, Secretary Price, Ivanka Trump, Jared Kushner and biomedical experts included drugmakers and leading university and hospital officials. The meeting’s invitation list reflects appropriate recognition of our closely integrated life science innovation ecosystem. Significantly, not discussed were NIH budget cuts to our commercialization bridge’s on-ramp or biopharmaceutical price controls which would undermine its off-ramp. According to NIH’s Francis Collins, the meeting focused on the importance to the economy of a strong U.S. biomedical research enterprise, including the role of government-funded research.
Reading the White House is difficult, but the meeting’s discussants and matters discussed indicate White House understanding of our life science innovation ecosystem’s infrastructure and its full complement of keystone components. Meanwhile on another important front, below are excerpts from a May 10, letter to the WSJ written by Rep.Tom Cole whose support for NIH funding is both critical and matched by his Democratic colleagues. Here is part of what he said about the recent budget action supporting NIH.
“I appreciate the support of my colleagues on the other side of the aisle who also recognize the important work being done by the NIH. This is a nonpartisan issue. The funding we secured for the NIH was supported by every member of the subcommittee and was clearly not a partisan vote. Supporting the pre-eminent institution researching the causes and cures of our country’s most devastating diseases has long been a Republican priority. The devastating human consequences of diseases like Alzheimer’s and cancer are evident to every compassionate person. However, many people fail to recognize the enormous costs these diseases impose on the federal government as well as individual families. Investing money to seek cures is the right thing to do. It is also the smart thing to do. I hope Congress will continue to prioritize the NIH in the coming 2018 fiscal year. Curing diseases can save and improve millions of lives while reducing federal expenditures in Medicaid and Medicare by billions of dollars.” Continue reading Signs of Wide Support Life Science Innovation
In his excellent IPWatchdog post, Bruce Berman discusses Jonathan Taplin’s new book, “Move Fast and Break Things.” In his post, Bruce sagely states, ” It would be difficult for many people and businesses to live without Amazon, Google, YouTube and Facebook, but it is becoming virtually impossible for those who produce intellectual property to live with them.” If you missed it, his entire post and Taplin’s book are both worth reading.
But today’s must-read is a joint op-ed the Sunday Washington Post by MIT President Eric Lander and Alphabet’s (Google’s) Eric Schmidt. In their short well-crafted plea to the Trump Administration and Congress, the two Erics praise our nation’s underfunded R&D supported innovation ecosystem, referring to it as, “The Miracle Machine that needs refueling.” They explain the fundamental difference between investable and curiosity-driven basic scientific research saying “its fruits are typically too unpredictable, too far from commercialization and too early to be patentable. That’s where government comes in. While investing in basic research at universities usually doesn’t make sense for business, it has been a winning strategy for our nation. ” They then list its commercialized economic benefits including Google’s 40,000 domestic employees, then close by saying, “The Miracle Machine has been astoundingly successful. The problem is that too few people — in government or the public — know how it works. As a result, we’ve been letting it fall into disrepair. If we don’t change course and invest in scientific research, we risk losing one of America’s greatest advantages. To our lasting detriment, we may wake up to find the next generation of technologies, industries, medicines, and armaments pioneered elsewhere.”
Continue reading Miracles Can Happen
As usual Paul Morinville, (joined this time by his good colleagues) is right-on. State universities and their affiliates have been given a “get out of PTAB card ” by the University of Florida decision because of their 11th Amendment sovereignty. It may be that other research universities are not so blessed. But the patents as property issue he details affects everyone. Paul’s IPWatchdog piece is, therefore, essential reading for all. The difference between the juridical “liability” and “property” theories is how research universities were punished by eBay in 2006 and ever since. Now its “Public Rights Vs Property Rights,” and that debate not only affects everyone it affects the very survival of our patent system. Paul explains it well enough to help readers tell it to their congressional delegation. To read their excellent and detailed explanation, please visit our IPStrategic.com website.