The US federal government has a federal mandate via the Bayh-Dole act (Bayh-dole act 35 u.s.c. 202). This act of congress from 1986 grants universities and institutions funded by the US government to do research to keep, own and develop their intellectual property. Thus if you have a federal grant, make a discovery and patent that discovery the University owns that patent. The inventor does not own it, but in the act it is stated that the inventors must benefit from the invention.

This is a federal law. If I or the university were to break this law we would risk fines and other penalties.

The act also goes on to say that the Federal government keeps strings to the invention such that it can use it if needed, and that the invention must be developed. With regard to the government’s use of an invention, this is referred to as “march in rights” where the feds can take or use an invention for national security. It also has the right to use it anywhere in the world or get the chance to license that technology anywhere in the world. The stipulation that the invention must be developed is an important one in that if a big company has competing technology it is against federal law for that big company to buy that technology and hide it so that they can use their technology, at a higher price. This is called, “buy it and bury it” in the business. So federally funded discoveries are not lost or swallowed by bigger conglomerates.

In an effort to facilitate development of technologies the Bayh-Dole act also mandates that preference for licensing and developing opportunities of federally funded discoveries be given to small US owned companies. This economic stimulation has been a boon to the technology sector allowing many small technology (biotech) companies to be formed and flourish. Excluding the bursting of the tech bubble this has been a huge economic stimulus because bright technology folks can work in universities and make discoveries and be allowed if not encouraged to develop those discoveries. Who is better qualified to develop my invention than me? The answer is no one.

If this were a love story I would close with, “and they lived happily ever after.” Unfortunately that is not the end. A backlash has occurred with scientists and inventors being involved in developing their own discoveries. This is the issue of compliance and is the heart of the new Catch 22 in academia.

Compliance laws, are often university or state laws that say a scientist cannot be involved in a company with royalty or equity or stock options and do research to support that discovery. What do I mean by that? Well, if I make a discovery of a new blood test using federally funded money the university is obliged to patent that discovery per the Bayh-Dole act. So that a big company does not buy it and bury it, a small US based company is formed to develop that discovery. Remember this is mandated by the Bayh-Dole act with preference to small companies. If I buy stock in that company or consult with that company to help develop that technology I am in breach of conflict of interest. If I write a grant to the company to fund research on that subject I am in breach of conflict of interest. The state and university regulations on conflict of interest say that I cannot work on developing that technology. However, if I do not work on that technology it is not developed. Therefore I am in breach of the Bayh-Dole act.

Please remember a very important part of this story, if I made the discovery I am the expert on this discovery there is no one else in the world who can develop this better than me. So, yes, ladies and gentlemen a classic Catch 22 exists because I must patent and develop discoveries made with federal funds. However, I am not allowed to be involved in developing those technologies because of state and university rules on conflict of interest. Me not being involved in developing the technology breaches Bayh-Dole by failing to develop federally funded technology.

My choices are clear; I can go to a federal penitentiary or a state prison. If anyone reading this wants to argue the point or say it is not this bad, check out the blog by Phil Cola where his cure for compliance issues is to make sure the intellectual leaders of a discovery do not lead the research. http://www.medcitynews.com/index.php/page/2/?s=conflict+of+interest.

It is that bad and this is a catch 22.