Indian Bayh Dole in the News: Faith Based IP vs Empiricism


Our efforts at sparking up some interest in the proposed Bayh Dole style legislation in India pays off. As readers may be aware, SpicyIP reported on this issue here (this post links back to earlier posts on the theme).

We were very concerned with the secretive way in which this bill was sought to be introduced–hopefully with more journalists picking up on this theme, the government will come under some pressure to be a little more open and transparent here. And this might engender more public discussion on such a critical piece of legislation.

Jyothi Datta of the Hindu Businessline has this excellent report:

“Scientists may not be the best negotiators, when it comes to converting their inventions into commercial products. But the Centre is set to change this through a research and intellectual property-related (IP) Bill that seeks to empower Government-funded institutions to commercialise their research, besides ensuring some of that revenue flows back to the scientist.

A draft Bill to protect and commercialise public-funded research has been circulated among different ministries and is with the Cabinet for comments and approval, Dr K.K. Tripathi, Adviser to the Department of Biotechnology, told Business Line. The Cabinet will decide whether to take the Bill to Parliament or seek further public debate, he said.

But, with the draft Bill being cloaked in secrecy, IP experts are concerned whether the proposed legislation will succeed in side-stepping the draw-backs of a similar Act in the US that had sought to IP-empower US universities in 1980.

On similar lines as the US’ Bayh-Dole Act, the draft Indian Bill encourages public-funded institutes to patent inventions and explores avenues for commercialisation. It also proposes that the inventor gets 30 per cent of the revenue from commercialising the patent, while 10 per cent is ear-marked for the institute’s IP Management Cell, Dr Tripathi explained. Rights to the product remain with the institute, while assignment rights are jointly held between the scientist, institute and the Government. Commercialisation plans require consent from all the three, he added.

There has been a substantial increase in the product filings by the Government-funded institutes, post the product-patent regime in 2005, he said, without giving details.  

But can a US legislation that addressed specific issues with some success be ‘imported’ into the Indian context, questions Mr Shamnad Basheer, Research Associate with the IP Research Centre that is part of the Oxford University. Unhappy with the ‘non-transparent’ manner in which the Bill is being introduced, he seeks clarity on issues such as whether an inventor would have the discretion to decide to leave his/her invention in public domain. In some critical areas of science, it may make sense to encourage more ‘open science’ as opposed to a proprietary model, he observes.

Mr Mark Pohl, with US-based Pharmaceutical Patent Attorneys, agrees that the US legislation concerned did support some significant success stories such as blood-thinner Warfarin, for example, that came from a University patent.

However, universities have not benefited in revenue-terms, he says, citing an economic analysis by the US government that found that every dollar invested by universities in patents and licensing created approximately $0.30 in revenue. The missing link, he said, is universities’ lack a sense of what is commercially valuable. They tend to patent work that is scientifically creative or unusual, without knowing much about whether or not that innovation will make a profitable product.

Patent expert, Dr Gopakumar Nair, adds that over-negotiation by scientists, evaluation of the benefits of technology-sharing etc. will unravel as the proposed norms get implemented. The Bill should be flexible and there should be a head-room for change, if it has to succeed, he observed.”

Business Standard reports on this news here. And Joff Wild of the internationally reputed Intellectual Assets Management Magazine (IAM) reports on this news here. In particular, Joff notes that:

“India would not be the first country to try to imitate the success fo Bayh-Dole. At the end of 2007, for instance, the Chinese passed a law that allows scientists, institutions and universities to own the patents that are created by publicly-funded research which they carry out. However, experience also shows that legislation is not enough if the scientists and institutions at which it is aimed are not willing or able to exploit it.

Many academics, for example, are just not suited to building businesses, or regard the idea of doing so anathema; while setting up a technology transfer operation requires significant upfront investment from the institution that is doing it, with no guarantees that anything created will be of interest to anyone.

In India there are also other worries. For example, the Indian Patent Office is chronically understaffed, so there have to be real questions as to whether it could cope with a surge in applications from a new source. In any case, the level of patenting among Indians remains very low – around 80% of patents granted in the country go to foreign concerns. Away from IP, the wide investment hinterland that has allowed start-ups and spin-outs to thrive in places such as the US and the UK just does not exist in India at the moment – something that raises real doubts about how many patents granted can be successfully commercialised. For any Bayh-Dole style legislation to have an impact, therefore, the Indian government will surely have to deal with a whole host of other issues as well.”

As SpicyIP has already pointed out, the bill’s intent is laudable and one has to create viable mechanisms to promote university– industry technology transfer and encourage more university research to be converted into useful technologies. However, the bill has several shortcomings, pointed out in our earlier post here.

Since this legislation raises critical issues pertaining to the nature of university research and innovation, the government needs to engender more public discussion around this and elicit the views of stakeholders. What is most worrying is the implicit assumption that whatever worked for the US (even assuming it worked–and there are plenty of skeptics who have enough data to cast some doubt on the one sided wonders of the Bayh Dole legislation) will necessarily work for India.

I’m just not sure that the government has done its homework here–do we have data on university patenting in india, quantum and kind of tech transfer achieved, impediments to tech transfer, level of public funding of research, numbers of papers published and other ways of measuring knowledge spill overs etc etc?

Importantly, the assumption that this bill will convert universities into cash cows susceptible to drowning in all the money that will pour in from tech transfer deals and license fees is not an unchallenged one. As Mark Pohl, a brilliant attorney representing some of the leading generic companies in the US suggested in the Business Line article above:

“However, universities have not benefited in revenue-terms, he says, citing an economic analysis by the US government that found that every dollar invested by universities in patents and licensing created approximately $0.30 in revenue. The missing link, he said, is universities’ lack a sense of what is commercially valuable. They tend to patent work that is scientifically creative or unusual, without knowing much about whether or not that innovation will make a profitable product”.

The above sentiment is expressed by Joff Wild as well in his thoughtful note on the IAM blog.

We’ll have a more incisive analysis of some of these issues in the coming days from a reputed scholar who’s been writing on his theme for several years now. Professor Bhaven Sampat of Columbia University, one of the leading authorities on Bayh Dole and its impact on university research in the US, has promised to guest blog for us in the coming days.

Unless we have more data on some of these issues, we cannot take an informed call on what legislation is best suited for encouraging more university-industry tech transfer. In short, the government needs to seriously start thinking about moving away from a “faith” based IP model to an “empiricism” based one. Only then will IP policy making truly come of age in India!

Shamnad Basheer

Shamnad Basheer

Prof (Dr) Shamnad Basheer founded SpicyIP in 2005. He is currently the Honorary Research Chair of IP Law at Nirma University and a visiting professor of law at the National Law School (NLS), Bangalore. He is also the Founder of IDIA, a project to train underprivileged students for admissions to the leading law schools. He served for two years as an expert on the IP global advisory council (GAC) of the World Economic Forum (WEF). In 2015, he received the Infosys Prize in Humanities in 2015 for his work on legal education and on democratising the discourse around intellectual property law and policy. The jury was headed by Nobel laureate, Prof Amartya Sen. Professional History: After graduating from the NLS, Bangalore Professor Basheer joinedAnand and Anand, one of India’s leading IP firms. He went on to head their telecommunication and technology practice and was rated by the IFLR as a leading technology lawyer. He left for the University of Oxford to pursue post-graduate studies, completing the BCL, MPhil and DPhil as a Wellcome Trust scholar. His first academic appointment was at the George Washington University Law School, where he served as the Frank H Marks Visiting Associate Professor of IP Law. He then relocated to India in 2008 to take up the MHRD Chaired Professorship in IP Law at WB NUJS, a leading Indian law school. Prof Basheer has published widely and his articles have won awards, including those instituted by ATRIP and the Stanford Technology Law Review. He is consulted widely by the government, industry, international organisations and civil society on a variety of IP issues. He also serves on several government committees.

9 comments.

  1. AvatarYogi

    Kudos!
    Excellent briefing Shamnad. I fully agree with your views on “faith based IP v. empiricism”. In many ways, it is high time that our ministries handling this understand that polarised views on IP can do more harm than good.
    My question here is about the issue of value capture associated with commercially non feasible inventions generated by universities. Some inventions may not be commercially valuable at one point of time, or in relation to a specific product or area of application, but may still be freely used due to its public domain character (the problem is more acute in the new age of converging technologies). In this situation,how should the incentive mechanism respond? Is it possible to foresee the value of an invention (from a pure commercial feasibility point of view )and decide on its patent worth? As I see it, although university patents on an extensive scale may add to a lot of transaction costs and average lesser licensing revenues (as evident from the US analysis), would it be a right move to dedicate some ideas to the public domain through open science? Of course, there is enough economic evidence to prove the value of a healthy public domain. But will it be sufficient to offset the loss of value capture associated with commercially non viable inventions? I also wanted to inform you that there is some research done on this in Cochin university by an LL.M student. Surprisingly, she came to a conclusion that a Bayh-Dole styled Act was necessary. I am not clear about the reasons though. There was some empirical study done in this regard.

    Your views on empiricism also reminds me of a new book release named “Patent Failure” by Bessen and Meurer. I haven’t had any opportunity to read it. At least, a few reviews suggest that it has gone far from relying on peanut-butter and jelly sandwich type of “bad” patents to castigate the patent system in itself. May be spicy IP can have a review by exploring the Indian dimension (if any). Just a suggestion.

    Reply
  2. AvatarShamnad Basheer

    Dear Yogi,

    Great points and thanks for them. I’ve heard of this wonderful book by Bessen and look forward to reading it soon. Also, would be very interested in seeing this research done by the LLM student. Do you have this article with you? or can you refer me to this person?

    I didn’t quite get your point on the commercial non feasible inventions vs ones in public domain. So, are you suggesting that commercially non feasible inventions should be patented or should not be patented?

    I’m not sure if I would strike a distinction b/w a commercially feasible vs non feasible invention. Even if it is commercially feasible, basic ideas ought to be left in the public domain. Its a tough call—but I guess the inventor is the best placed of all of us to take that kind of an informed call—and sadly the legislation does not give him/her that leeway.

    Reply
  3. AvatarYogi

    Hi Shamnad,
    I have already requested a copy of her article/work. You may also shoot an email request if need be. Email: [email protected]
    By questioning incentives for commercially non feasible inventions, I was not trying to blur the distinction between basic ideas and applied inventions. Basic ideas/abstract ideas are bound to be in the public domain. No issues.
    And yes, we can’t really make the distinction for the purpose of deciding what inventions coming out of academia should be patented. Objectively, incentive mechanism through patents need not respond to all inventions coming out of academia. In that case, incentive structure for academic R&D will have to depend on those patents which have strong rewards to compensate for the rest of research outputs that do not get patented. I think this is how it does practically work.
    And unfortunately, as you rightly remarked, the notion that technology transfer office should have an upper hand in pursuing patents as a rule, may add little success in terms of technology transfer and knowledge dissemination. We definitely need to rely on more empirics to get it going.
    Looking forward to Prof. Sampat’s column on this issue.
    Thanks,
    Yogi

    Reply
  4. AvatarShamnad Basheer

    Thanks so much Yogi,

    I have just shot her an email. I’m so happy that so many of Dr NSG’s students are doing such fabulous work. We need to think of ways to get more students doing research on IP. More papers and more data is what we need at this juncture!!

    Reply
  5. AvatarShamnad Basheer

    Our well informed “anonymous” IP expert strikes again. Here are two emails of his to me. In particular, note the last line in his second email, where he really hits the nail on the head:

    “A Bayh-Dole type Act, without appropriate training on negotiations could be handicapped.”

    “Shamnad,

    I recently bought the book “Patent Failure” by James Bessen and Michael J. Meurer (Princeton University Press, 2008) (a good review can be found here: http://www.patentlyo.com/patent/2008/03/do-patents-stim.html). I have just started reading it and so am not able to comment, but the review is good. It seems a balanced book. A talk by Jim Bessen on this topic could be heard at http://wilkins.law.harvard.edu/events/luncheons/2008-03-04_bessen/2008-03-04_bessen.mp3

    Another important book that deals with Bayh-Dole Act is “Ivory Tower and Industrial Innovation: University-Industry Technology Transfer Before and After the Bayh-Dole Act” by David Mowery, Richard Nelson, Bhaven Sampat, and Arvids Ziedonis (2004). I have just ordered it.  This book supposedly gives a deep insight into the impact of Bayh-Dole Act on technology transfer.

    “Shamnad,

    Very well written. Congratulations. We need to be cautious on this. I entirely agree, through personal experience, with Gopakumar Nair’s point on over-negotiation by scientists.

    Many institutes and universities do not have any technology transfer offices. IP aspects of any joint-research or even sponsored-research program are left for lawyers with no real IP experience to negotiate. Often times, they take a rigid position “all IP will be ours” which is anathema to private industry. Many negotiations have broken down because of this. CSIR’s well-intentioned but bull-headed promotion of IP-ownership is the main culprit for this. Those training programs did not address IP negotiation related issues. A Bayh-Dole type Act, without appropriate training on negotiations could be handicapped.”

    Reply
  6. AvatarJ. Sai Deepak

    Dear Sir,
    This comment comes a tad bit too late and I hope that does not make it irrelevant. The post practically touches on most contentious aspects of the PFRD bill; however, I have a few points to contribute based on first-hand experience:

    1. On one hand, few seem to proscribe a romanticised view of the benefits of the Bayh-Dole and consequently, the perceived ability of its Indian avataar in stirring Indian Universities out of their stupor; and on the other hand, an equally romanticised view about the mindset of Indian academics is being offered to counter the possible effects of the bill in encouraging patenting. Neither of these romanticisations is free from generalization. That said, since a direct “importation” of the bill oblivious to Indian realities seems to be the primary grievance against it, we might as well take a hard look at a few other Indian realities to understand the implications and potential spin-offs of such a law. If the romanticised view of academics in Indian universities were to be true, then atleast such a romantic view ought to have translated into quality publications which in turn should have reflected in India’s ranking in overall scientific output. But this does not seem to be the case with more and more Indian scientists lamenting the sharp decline in the quality of our scientific output in absolute terms and again in comparison with Chinese and Brazilian output. If so, the point is neither are we producing quality scientific literature nor are we seriously investing in industrial research and more importantly, we keep showing one as the excuse for non-performance in the other.

    2. Also, it is absolutely undeniable that the ability to stick to one’s point at the bargaining table is a condition precedent if universities are to derive optimum benefits out of the proposed bill. But, isn’t that a condition precedent for technology transfer transactions to succeed, even in the absence of such a law which the bill seeks to promulgate? If so, lack of negotiation skills is not a limiting factor which is peculiar to the framework which the proposed law seeks to put in place. Also, if the romanticised view of the Indian academic were to be accepted, no matter what one does with or without a law, his mindset or nature cannot be changed overnight. Then, a technology transfer office manned by suitably qualified people set up under the aegis of a law which uniformly governs technology transfer with certain minimum mandatory provisions must certainly be seen as the solution which may save the poor Indian academic from his worldly woes.

    Reply
  7. AvatarJ. Sai Deepak

    3. At a time when Indian academia is woefully short of talent, why shouldn’t the PFRD bill be seen as an initiative which may attract scientific talent? Setting up huge corpuses for quality visiting faculty, backed by private contributions from alumni is something which has worked for US institutions, but for some reason is rarely infrequently attempted in this country whose culture supposedly takes pride in venerating teaching and teachers. So, the PFRD bill could help us address issues of paucity of quality faculty by offering the inventor a share in the revenue generated from licensing his inventions? Of course, the counter to this is that, it may be achieved even without the bill. But one of the key features of the bill is to bring in something which most Indian institutions have displayed an anathema for- Transparency. Sponsored Research and Industrial Consultancy cells are active in quite a few “elite” eponymous technology institutions in this country, but ask even one of these institutions to come out with proper figures on their inventions and all we get are blank stares (sometimes angry glares) and dusty files which can drive one into fits of uncontrollable cough. If this is the case with such elite institutions, I am not sure if the situation in other institutions could be any better.

    4. Failure of technology transfer offices in the US is a symptom, the cause may not be an inherent fault with the Bayh-Dole structure. It is like saying that because the Ganges is polluted, Gangotri too must be polluted. What are the causes of failure of TTOs? Have they universally proven to be a failure pointing to a systemic flaw in the framework of the Bayh Dole? I am not sure. This is because each institution may have certain strengths and its own comfort zones. For instance, civil engineering and electronics is the playground of NIT Warangal, IIT Kgp is known for its work in digital signal processing and agriculture. If the TTO in these institutions were to focus on these areas instead of frittering their energies in all directions, the TTO may actually pay dividends. In cases where the TTO has failed, it may be because it has spent the dollar in the wrong area. This in fact takes us to another indirect spin off of the bill. As universities realise their strengths and weakness on the basis of their ability to successfully peddle their inventions to commercial investors, they get a better idea of where they need to improve and work more. After all, as in any other case, market tells the universities what they are worth in practical terms. This may also have an impact on hiring practices in the universities.

    The long and short of all this verbiage is that there may be lot more downsides to the bill, even grave ones at that, but if the reason for proscribing the bill is that there is not enough empirical data to support its introduction, I think all of us know that there will never be enough data to introduce any new legislation. To an extent, policy decisions are guided by intuitive belief based on experiences which are at one-remove (here the Bayh Dole), though such experiences may not present an entirely hunky dory picture.

    Sincerely,
    Sai.

    Reply

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