January 26, 2024
National Institute of Standards and Technology 100 Bureau Drive
Gaithersburg, MD 20899
RE: NIST Docket No. 230831-0207, Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights
To Whom It May Concern:
Eagle Forum Education & Legal Defense Fund (“Eagle Forum ELDF” or “EFELDF”), a nonprofit organization founded by Phyllis Schlafly in 1981, is pleased to provide comments on “Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights,” Docket No. 230831-0207.
The National Institute of Standards and Technology (NIST) proposal would completely reverse a pivotal provision of the Bayh-Dole Act and its four decades of application by administrations of both political parties. Further, the Interagency Working Group for Bayh-Dole’s and NIST’s apparent drive to legislate through guidance and an opaque process formulating this arrogation of legislative power are most regrettable.
We underscore that the Bayh-Dole Act provides no grounds for considering a product’s price in determining whether march-in is in order. As we said in our 2019 comments on the NIST Green Paper Discussion Draft:
Defining when march-in is appropriate, pursuant to statute, and clarifying the meaning of “reasonable terms” and “practical application” so as to definitively exclude price of goods and services — that is, to codify the original intent of the law’s authors, as stated by Sens. Bayh and Dole1 — would safeguard the ability of commercializers to rely on the IP exclusivity that is critical to achieving commercial success and ensuring that private investors will continue to assume the risk involved in bringing an invention to market. March-in must never be twisted into a means of enacting price controls2 (emphasis added).
In comments in 2021, Eagle Forum ELDF reiterated that the eventual price of a commercialized product associated with a federal grant that led to a discovery that proved to be patentable whose technology was successfully transferred has no bearing on march-in considerations, based on the statutory language. There we explained:
[T]he statute (35 U.S.C. § 203) omits price of goods and services as an element for consideration of whether to exercise march-in. The law provides four narrow grounds for the exercise of march-in rights. Not one of them includes price as a consideration. Therefore, no statutory basis for injecting product price into march- in exists.
We can only conclude that the absence of “price” or “pricing” in the underlying statute itself leaves no room for introducing just such a new, substantive term in regulation. To do so as proposed would exceed the metes and bounds of the statute and, thus, is not permissible. The term “pricing” must be stricken from the proposed revision, or otherwise be clearly excluded from consideration, if the rule is to accord with the statute.3
Not a jot or a tittle has changed in Bayh-Dole’s march-in statute. The named authors of this landmark law, Sens. Birch Bayh and Robert Dole, confirmed that they purposely omitted price from march-in: “The law makes no reference to a reasonable price that should be dictated by the government. This omission was intentional ….”4 Nothing in this law remotely authorizes considering pricing to justify march-in.
What NIST proposes undermines the law’s original intent and its proven effectiveness. The Congressional Research Service (CRS) reports, “One of the major factors in the reported success of the Bayh-Dole Act is the certainty it conveys concerning ownership of intellectual property.” CRS cites the returns on investment to taxpayers and the government that Bayh-Dole delivers, regardless of eventual pricing:“ Observers generally agree that the Bayh-Dole Act has successfully met its objectives. . . . The government receives a significant payback through taxes on profits and society benefits from new jobs created and expanded productivity. The importance of patent ownership has been reinforced by the positive effects studies have demonstrated P.L. 96-517 [has had] on the emergence of new technologies and new techniques generated by American companies”5 (emphasis added). NIST’s proposal jeopardizes all this success6 by throwing the certainty of IP ownership that Bayh-Dole’s actual language has given into question, making IP subject to expropriation by government at the behest of aggressive actors.
Confidence in the security of IP exclusivity that Bayh-Dole has heretofore ensured is vital, as it would be foolish for government to assume the high level of risk of failure that accompanies product and market research and development. Commercialization appropriately relies on private investment, not taxpayer dollars, because the failure rate of successfully producing a viable commercial product is extremely high.
Further, federal basic research support is very small, by orders of magnitude, compared with the risk capital investment required to attempt to bring forth a product from the initial discovery’s invention to market successfully. A study affirming this differential “underscor[es] that the development of basic discoveries requires substantial additional investments, partnerships, and the shouldering of financial risk by the private sector if therapies are to materialize as FDA-approved medicine.”7 The same holds for other cutting-edge inventions and other arts or areas of technology.
Beyond the utterly violative nature of the framework’s injecting the square peg of price into the round hole of the statute’s plain meaning, the proposal suffers from other fatal flaws. The proposed framework leaves “reasonable price” undefined. Such open- endedness would allow this criterion to be applied in altogether arbitrary ways, agency by agency, case by case. That would undermine Bayh-Dole’s streamlined, uniform handling of IP derived from federal research funding, enabling agencies to micromanage Bayh-Dole inventions. This would return technology management to Washington, reversing Bayh-Dole’s decentralization to and empowerment of academic institutions and others inventing with federal support. Such uncertainty and bureaucracy would further drive off potential licensees and reduce commercialization.
Also, anyone can file a march-in petition and repeatedly file petitions, claiming they could make products cheaper. Thus, the draft guidance enables rival companies, foreign adversaries, and bad actors to harass innovators and devalue their IP. It renders licensing federally funded IP toxic. The proposal tilts in a way that prejudges “public use” and leans against Bayh-Dole’s core objective of incentivizing commercialization and product development from federally funded basic research findings.
Ironically, the framework runs at odds with and will undercut many of President Biden’s signature policies. The proposal will operate counter to the goals of the CHIPS and Science Act, the Cancer Moonshot, ARPA-H, and the Executive Order on Advancing Biotechnology and Biomanufacturing Innovation, which each depend on robust public- private collaboration. Private firms will hesitate to license related federal research directly due to this guidance. Because price-based march-in will apply to all types of technologies and across government agencies, the guidelines put at risk inventions small companies make under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which Bayh-Dole also covers. This puts at risk those small businesses themselves. Thus, based on the broad scope, wide applicability, and unbounded discretion given government agencies, the proposed guidance will almost certainly cause a dramatic reversal of Bayh-Dole’s great success.
In summary, we conclude that the absence of “price,” “pricing,” or a similar term in the underlying statute itself, coupled with the uniform record of denials of march-in petitions asserting pricing grounds against Bayh-Dole inventions by administrations of both parties, leaves no room for introducing such extra-statutory notions—by rule, regulation, guidance, or any other means. To do as proposed exceeds the metes and bounds of the statute and thus is impermissible.
Respectfully,
Ed Martin, President
Andrew L. Schlafly, Counsel
James Edwards, Patent Policy Advisor
1 Letter to the Editor from Sens. Bayh and Dole, Washington Post, “Our Law Helps Patients Get New Drugs Sooner” (April 11, 2002).
2 At pp. 3-4, EFELDF January 9, 2019, comment letter on NIST Green Paper Discussion Draft.
3 At p. 2, EFELDF March 24, 2021, comment letter on NIST Docket No. 201207-0327.
4 Letter to the Editor from Sens. Birch Bayh and Robert Dole, Washington Post, “Our Law Helps Patients Get New Drugs Sooner” (April 11, 2002).
5 https://sgp.fas.org/crs/misc/RL32076.pdf
6 https://autm.net/AUTM/media/Surveys-Tools/Documents/AUTM-Infographic-2021.pdf
7 Duane Schulthess, Harry P. Bowen, Robert Popovian, Daniel Gassull, Augustine Zhang, and Joe Hammang, “The Relative Contributions of NIH and Private Sector Funding to the Approval of New Biopharmaceuticals,” Therapeutic Innovation & Regulatory Science, January 2023; 57(1):160-169, available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9440766/ .
