empliment

When your innovative idea gets tied

up by piles of paperwork, and months of delay as Washington dawdles over

whether to let you market the thing or not, nasty thoughts about U.S. patent policy are never far off.

Just ask Sydney E. Salmon, a biontedical researcher at the University of Arizona. In 1977, Salmon and another scientist found that by growing human tumor cells in a Petri dish and adding anticancer drugs, they could predict what drug or combination of drugs would best shrink a patient's tumor. The method could also be used to screen the effectiveness of new anticancer drugs.

Salmon wanted to patent the technique. But since the salary of one researcher in the lab was paid by the Department of Health, Education, and Welfare (HEW), all rights reverted to the agency. To make sure the method did not just sit on a government shelf. Salmon on 5 July 1977 asked HEW for the patent rights, and on 29 July pub lished his results in Science. An editorial in the New England Journal of Medicine soon took note of the technique, and even Time ran a story on it. Not long afterwards, drug companies showed up at Salmon's door, wanting to market the method. HEW, however, had not yet ruled on the patent rights, and the companies soon lost interest. It took until March of this year in all some 20 months--before HFW finally decided to hand over the rights. The drug com panies are only now starting again to ask about licensing, the patent rights.

**This evention will spate cancer pa tients from receiving; toxic drugs which we can predict would be of no benefit."* Salmon recently told a Senate heating, "Yet this slow process of caining HEW approval delayed its availability to the public by at least 1 year.”

It is an off told tale on Capitol Hill these days. A steady stream of inventors has been show me up at hearings to com plim about the bureaucratic knots that tie up the transfer of patents derived from federally funded research. Then goal is to busest nov, fegislation, and it seems to be working. Support has been binkime for a Senate bill that would anta matically give patent rights to univers ties and small busmesses The bill, the University and Small Busmesses Patent SCIENCE. VOL No. AGENT ES

Procedures Act (S.414), is coauthored by Birch Bayh (1) Ind.), chairman of the Senate Judiciary Committee's subcommittee on the Constitution, and Robert Dole (R-Kan.).

The bill would let any federally funded university or small business make some money off their bright ideas. Say, for instance, that a researcher on a Department of Energy (DOE) grant came up with a cost-efficient way of converting coal into gasoline. Under the bill, the inventing organization could apply for a patent-without waiting for permission from DOE-and then license the idea to a company for up to 8 years. A portion of the money male during commer cialization would be returned to the inventing organization with the stipulation that the funds, over and above adminis trative expenses and a fee to the inventor, be used to support further scientific research.

Not only university researchers are backing the bill. A study by the Department of Commerce has recommended the exclusive licensing of patents derived from federally funded research. The General Accounting Office (GAO) has come out in favor of the Bayh Dole legis

businessmen. Of the 30,000 inventions now in the government's patent portfolio, an estimated 4 percent have been licensed, and even fewer make it to market. One reason is that the government insists on issuing “nonexemsive" li; censes--which means that any number of companies can jump in along the road to development and marketing (though few take the chance). Another reason. say many researchers, is that the govern ment doesn't know how to market an invention. The further one goes from the source of the idea, the inventor, the less one knows about how to put it to work.

The government is not all thumbs. however. To help cut through this web. federal agencies over the years have worked out agreements with certain universities that show a knack for peddling their inventions to compames that will produce them. Called Institutional Patent Agreements (PA), they allow a university to become the owner of a patented mvention resulting from federally funded research and to give an exclusive license to a company for up to 5 years. IPA's are few and far between, however, They are in place at only 72 HEW grantee institutions and, out of 1200 institu

lation. And the critics of such legislation, who in the past have railed about the "giveaway of public funds," have grown unusually quiet. The reason scems clear. Industrial innovation has become a buZ7 word in bureaucratic circles. The White House, for mistance, is about to release a study on how to cure the alleyed decline in the innovative spirit within US m dustry. The patent transfer people have Latched onto this issue. It is out ime. they say, to cut the red tape that saps the incentive to be inventive.

The way things omrently stand, the in centive is indeed small Years em ship by before a fundme grenev decides whether of not to return Patent miglas to JLT HIVER for's otraucation, and, as often as not. the ars neies decide to hold on tein The agencies moreover, Poove to be poo

tions that receive National Science Foundation funds, they are in place at about 20. And not many more are expected, since the agencies are con servative in identifying institutions that have what it takes to promote technology transfer.

The Bayh Dole bill goes beyond the IPA concept in that it makes no distrochon between institutions that have a knack for marketing their inventions and ties

that do not. It says gay university of st; dl business can plange its own invention better than the government can. The IPA, moreover, is limited to inven brous discovered in government grants, pot contracts Not so with Bayh Pole. Most everyone on any kind of funding AS covered, with the exception of by: busi ness, and that is mostly los tas heal rea

sons. "We'd like to extend it to every body," said one Senate ande, "but if we did, the bill would never have a chance of passing. Such was the situation sev eral years ago when simular patent legislation that applied to all businesses was introduced. Consumer advocates and trustbusters at the time cried giveaway and monopoly, and the bill soon died.

To further mute critics this time around, the Bayh-Dole bill also has a payback, clause. This would provide a payment to the federal agency that funded the project, provided the patent proved to be a money-maker. It would give the government 50 percent of all net income above $250,000 received by a university from licensing an invention -not to exceed, however, the amount of government funding in the first place. It sounds straightforward, but some researchers see problems with it. "In arriving at a remuneration formula, is the government support to be determined on the basis of one year? Two years? Ten years?" asked Baruch S. Blumberg, a Nobel Laureate who recently testified on behalf of the bill. "Some grants are now in their 20th year. Resolution of this question could become an accounting nightmare."

Despite such problems, which according to Senate aides will be ironed out in conference, the bill has gained considerable congressional support. It has 28 cosponsors that range the political spectrum from Senator George McGovern (D-S.D.) to Senator Strom Thurmond (R-S.C.), Identical legislation (H.R.2414) has been introduced in the House by Peter Rodino (D)-N.J.), chairman of the House Judiciary Committee.

The GAO has also given its seal of approval to the bill. "We believe a clear legislative statement of uniform, government wide patent policy is long overdue," said Elmer B. Staats, Comptroller General, in testimony before Senator Bay's subcommittee on the Constitu tion. He noted, moreover, that a recent GAO study showed that HEW and other departments have been moving from what was once a liberal policy on the transfer of patent rights to one that is much more conservative. He said "an casing of the red tape leading to determi nations of rights in inventions would bring about an improvement of this reeond."

In a move that mas gam Administra tion support for the bill, a Commerce Department study has backed the idea of prautue Nlusive licenses fren lederal ly funded research The recommenda tions crew out of an Adaaoistration de mestic policy review on problems with

industrid nanovation. “If the results of federally sponsored R & D do not reach the consumer in the form of tangible benefits, the government has not completed. its job and has not been a good steward of the taxpayer's money,” sand the advi sory subcommittee on patents and infor mation chaired by Robert Benson of Allis-Chalmers Corp. "The right to exclude others conferred by a patent or an exclusive license under a patent may be the only incentive great enough to induce the investment needed for development and marketing of products.”

Foes of the legislation are few, but they do exist. One is Admiral Hyman Rickover, the Navy's veteran apostle of nuclear-powered ships. The reason so niany government-owned patents are not used, he recently told a Senate hearing, is that the vast majority of them are worthless. "These patents are filed defensively, or as status symbols. Other times an inventor simply misjudges the attractiveness of his ideas.... In my opinion, the bill overemphasizes the importance of patents, and, if enacted. would divert attention and resources of the government agencies away from their main functions."

Rickover also criticized as cosmetic a provision in the bill for march-in rights (which let the government take back the patent if it feels a discovery is being mar keted too slowly). The government has had march-in rights since 1993, he said, but it has never used them. “To be in a position to exercise these nights a gov ernment agency would have to stay in volved in the plans and actions of its patent holders and check up on them. If a government agency ever decided to exercise its march in rights and the patent holder contested the action, no doubt the dispute would be litigated for years."

Though Rickover came down hard against the ball, other traditional foes of such legislation have cased up. The Justice Department, usually hostile to any thing that smacks of monopoly, says it is reassessing its positioit. An ande to Senator Russell Long (D) La.), a veteran backer of government held patents, has told Bach's staff that the senator will not "actively oppose" the bill. And Senator Gaylord Nelson (D) Wis.), a longtime foe who asked the Admistration to sijspend new rules for IPAs List year so he could hold hearings to see if they were a "giveaway et public funds, is not actively opposing the bill, according to lus stallers.

With the opposition not putting up then usual night, is the bill a sure thing' Not quite, say several Senate andes.

They concede that the biggest handle to overcome is the weight of conventumnal wisdom. It goes something like this. Such a bill would permit the founding of monopolies that can charge high prices for the fruits of tax-aided research. It ́sa free lunch, say the enties, and it's not fair. One Senate aide who was skeptical of the bill put it this way. “At the stroke of a pen." be said, “you are creating billions of dollars of property that did not exist before, property that is created with taxpayer support. We are not about to jump on the bandwagon. We have an obligation to the public and to other patent holders. We want to make sure this is good public policy before we start touting its wonders."

For more than 30 years, the government has operated on the assumption that the economic rewards from federally funded R & D should be captured by the government, or shared only grindyingly with others, since public funds were used. Hence, the government's col· lection of 30,000 patents. That poliev, however, has not produced an astounding record of economic returns, and the conventional wisdom on public money and private gain may be in the midst of change. The innovation “Lag.“ more over, is becoming pop doamna, av evi denced not only by the Administration's domestic policy review but by media coverage such as the 4 June Newsweek cover story on innovation, subtitled "Has America lost its edge!” The winds of opinion are shifting. It may no longer take a leap of logic to see that good pub lic policy might include a modicum et private gain, especially when the alterna tive is patent portfolios that gather dust on government shelves.

--WILLIAM J. BROAD