WS>>(1)[DMCA_Discuss] On State Sovereignty and Senate Bill 2031, Leahy's "IP" Protection Restoration Act

carl william spitzer iv cwsiv_2nd at JUNO.COM
Tue May 21 14:14:20 MDT 2002

         From: Seth Johnson <seth.johnson at>

          (Improved version.  -- Seth)

          Two giant constituencies -- who naturally ought to have
     at heart many of the same concerns as the presently burgeon-
     ing community of citizens concerned about Federal and inter-
     national policy initiatives that affect their  technological
     and online freedom -- are now in the position of selling out
     their legally recognized power to resist these  initiatives.
     These  constituencies are the sovereign American States  and
     their Universities.

          Following  is a letter to Senator Leahy from the  Bayh-
     Dole  stakeholders  at numerous United  States  universities
     (University  "Technology  Transfer  Officers")  on   Leahy's
     Senate  Bill S-2031 (The "Intellectual  Property  Protection
     Restoration Act").

          Bayh-Dole  is the Act that signals the moment at  which
     Universities in America went from "intellectual property" to
     Intellectual  Property, abrogating the  clear  understanding
     that  they had held of how metaphorical and internally  con-
     tradictory that phrase actually is.

          Bayh-Dole not only undermined the Universities' mission
     of fostering the advancement of general human knowledge, but
     it also created a group of people with a vested interest  in
     the  idea  that they should be able to sell  the  fruits  of
     their research, despite the fact that it is Federally funded
     and  traditionally in the public domain as a result.   Bayh-
     Dole authorized Universities to enter into enormously lucra-
     tive private contracts with big-time "IP" stakeholders  such
     as  pharmaceuticals and software companies, in  which  those
     companies could obtain ownership of the fruits of the Feder-
     ally-funded State schools' research.

          S-2031 is a ludicrous Bill now entered before Congress,
     specifically designed to counter the fact that as  sovereign
     powers, States and their Universities have immunity  against
     Federal claims of intellectual property infringement.

          Certain  Supreme  Court cases have  affirmed  that  the
     States have sovereignty such that they would be immune  from
     charges  of  "intellectual property" infringement  from  the
     Federal level.  A State can very well, if it chooses,  grant
     broad freedoms to its Universities in the use of copyrighted
     and other materials.

          The letterwriters, beneficiaries of the Bayh-Dole  Act,
     specifically  state that they are supportive of  the  Bill's
     purpose of preventing "end runs" on the part of the  States,
     if  the  Bill  would only incorporate  provisions  to  allow
     individual State Universities to grant their own waivers for
     themselves.  They propose that these provisions would assure
     that the Federal Government could more easily obtain waivers
     from  the States against their asserting sovereign  immunity
     in "intellectual property" matters.

          This  Bill, and this response on the part of  Bayh-Dole
     "Technology Transfer Officers," are vastly misguided.  While
     the  provisions  in this letter might have  the  interesting
     effect  of undermining the force of Leahy's Bill, the  posi-
     tion  it  presents nevertheless fails to  address  the  real
     issues at stake.

          Concerned  citizens  should act now to  drive  a  wedge
     between  the States, who should know better, and  the  Feds,
     who have been coopting the Universities in their mission for
     many  years now, with little to no input on the part of  the
     broad  populace,  who are the ones most affected  by  short-
     sighted policies such as the DMCA and other content industry
     and WIPO-inspired measures.

          This  circumstance  places  at stake one  of  the  most
     powerful  recourses  to which American citizens  may  resort
     against  a large array of issues related to the  enforcement
     of so-called "intellectual property."

          Numerous law scholars are articulating a rationale  for
     S-2031  on the theory that it is not fair for States  to  be
     able  to assert autonomy regarding  "intellectual  property"
     policy.   But the truth is, America needs those who are  the
     supposed stewards of academic intellectual freedom to  seize
     any  opportunity  to resist and overturn  attempts  to  make
     property out of ideas.

          The  conscientious  action of just  a  few  enlightened
     University Officers, or even of otherwise compromised  Bayh-
     Dole  agents, can go miles towards reversing the bribe  that
     Bayh-Dole instituted in 1980.  Universities and their  State
     Representatives  must register their outrage  ragarding  the
     idea of selling out their States' "birthright," so to speak,
     and speak the truth in clear and uncompromising terms  about
     what Bayh-Dole and S-2031 really mean.

          Seth Johnson

     Following are

      1) a snippet of an Alternet article on Bayh-Dole;

      2) the reformist letter; and

      3) the (reformist-amended version of) the S-2031 Bill.

     On Bayh-Dole, see:

          [CC] Counter-copyright:


          (From the Alternet article:)

          Prior to the passage of the Bayh-Dole Act, patent  laws
     strictly separated academic research from corporate  profit.
     If a scientist took even one dime of money from the  govern-
     ment,  then the rights to his or her discovery  remained  in
     the  public domain. In the mid 1970s, with the economy in  a
     slump, and the U.S. trailing Japan in the technology revolu-
     tion, corporations began lobbying for changes in the  patent
     laws, changes that would hasten the transfer of technologies
     from the public to the private sectors.

          In 1980, Bob Dole co-sponsored a bill that gave private
     industry exclusive licensing rights to any promising discov-
     eries  arising from federally funded research.  In  Congres-
     sional hearings on the bill, then Commerce Secretary Phillip
     Klutznick  remarked  that the bill was akin  to  "using  tax
     money to pay a contractor to build a road and then  allowing
     the  contractor  to charge an additional toll to  those  who
     travel the road."

          Admiral Hyman Rickover added his objections, testifying
     that  rather  than  serving the public  interest,  the  bill
     would:  "throttle  technological  development,  hurt   small
     business,  stifle competition, and cost the taxpayer  plenty
     while promoting 'greater concentration of economic power  in
     the hands of large corporations'."

          Nevertheless,  Bayh-Dole was enacted in  October  1980,
     and thenceforth, the fruits of academic research passed from
     taxpayer funded laboratories directly to the wallets of  the
     pharmaceutical manufacturers.

          The  icing  on the cake was augmentation  of  Bayh-Dole
     with  the Federal Technology Transfer Act of 1986. This  law
     allows  government researchers at federal laboratories  like
     the  National Institutes of Health (NIH) to cut  deals  with
     biotech  and  pharmaceutical  firms,  known  as  Cooperative
     Research and Development Agreements, effectively privatizing
     all federally funded research.

          All agreements made under the Bayh-Dole Act are secret.
     Here's  one that was made public only when it was nipped  in
     the bud by the NIH. In 1992, Scripps Research Institute,  of
     La Jolla California, a facility which receives $100  million
     annually  from the NIH, made a deal with Sandoz,  the  Swiss
     pharmceutical  firm. Sandoz would pay Scripps  $300  million
     over 10 years, in return for exclusive rights to all discov-
     eries made by Scripps.

          (The letter, forwarded from UVentures Techno-L list,
          Techno-L at

          Mani  Iyer  (miyer at wrote:  Folks:  We  at
          Louisiana State University have developed a letter
          to  send to Senators and Representatives to  alert
          them to the devastating effect that S. 2031  would
          have on technology transfer at state universities,
          and to propose an amendment to the bill that would
          make  it far less damaging, while still  achieving
          the goals sought by the bill's proponents.

          We  invite  you to use our letter as  a  model  on
          which you may wish to base your own letter to your
          state  Congressional delegation. Such letters  are
          probably  most  effective when signed  by  higher-
          ranking  officials  --  e.g.,  by  the  university
          president, chancellor, or both, rather than by the
          technology  transfer officer (no offense  intended
          -- I'm one myself).
          The   model   letter   may   be   downloaded   at:

          (Please let me know if you are unable to  download

          the model letter)
          - Mani
          Mani Iyer, Director
          Office of Intellectual Property
          Louisiana State University
          203 David Boyd Hall
          Baton Rouge, Louisiana 70803-6100, USA
          Tel: 225-578-6941     Fax: 225-578-4925
          E-Mail: miyer at

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          (The letter:)

          [To be Printed on Appropriate Letterhead]

          April ____, 2002

          Senator  ________________   Via  Fed   Ex _______________
          Office Building Washington, D.C.  20510-______

          RE:    Pending  State  Sovereign  Immunity  / Intellectual
     Property Bills (S. 2031, S. 1611, H.R. 3204)

          Dear Senator _________:

          We write to voice our grave concern over the unintended
     consequences  of S. 2031, and to suggest an  amendment  that
     would resolve these concerns while still achieving the  ends
     sought by the bills sponsors.

          In 1980 Congress passed the Bayh-Dole Act, 35 U.S.C.  '
     200-212, to promote technology transfer and economic  devel-
     opment by encouraging universities to patent inventions made
     with  federal  support, and to license those  inventions  to
     private industry.

          The Bayh-Dole Act has worked well.  The Association  of
     University  Technology  Managers (AUTM)  has  reported  that
     technology  transfer in FY 1999 (conducted largely  but  not
     exclusively by universities) had added about $40 billion  to
     the  U.S.  economy, supported 260,000 jobs,  and  helped  to
     spawn  new businesses, industries, and markets.   AUTM  said
     that  there  was strong support for the conclusion  that  at
     least  2000 products are presently available to  the  public
     that  would never have been created in the absence of  tech-
     nology  transfer, development, and licensing  activities  by
     AUTM members.

          Owners  of  patents,  copyrights,  and  trademarks  can
     enforce  their rights by bringing suit  against  infringers.
     However,  the  Supreme Court has  interpreted  the  Eleventh
     Amendment to grant states and some state agencies "sovereign
     immunity"  from such infringement actions in federal  court.
     Congress  has  previously  enacted  statutes  attempting  to
     abrogate state sovereign immunity under federal intellectual
     property  laws,  but in 1999 the Supreme  Court  invalidated
     these  statutes.  Florida  Prepaid  Postsecondary  Education
     Expense Board v.  College Savings Bank, 527 U.S. 627 (1999);
     College Savings Bank v. Florida Prepaid Postsecondary Educa-
     tion Expense Board, 527 U.S. 666 (1999).  The current status
     of  the law, therefore, is that states and many state  agen-
     cies (including many state universities) may sue others  for
     infringement of state-owned intellectual property; but  they
     may  not, in turn, be sued for damages in federal court  for
     infringing  patents,  copyrights,  and  federally-registered
     trademarks, unless the state agrees to be sued.

          S.  2031,  introduced by Senator Leahy (also  S.1611  &
     H.R.   3204), while intended to "level the  playing  field,"
     would  annul  many of the rights  associated  with  patents,
     copyrights,  and  trademarks owned by a state and  by  state
     universities,  such  as  _________.  To  avoid  these  harsh
     penalties, a state would be required to waive its  sovereign
     immunity in suits concerning patents, copyrights, and feder-
     ally-registered trademarks.  This bill is  well-intentioned,
     but would have major, unintended consequences.

          An effective waiver of immunity under this  legislation
     could only be made by the state as a whole, not by an  indi-
     vidual  state university.  Unless a state agreed to be  sued
     by anyone who wished to bring a claim for patent, copyright,
     or trademark infringement, that state and its agencies would
     no longer be able to enforce or license intellectual proper-
     ty  rights  effectively.  The result would be to  reduce  or
     eliminate the potential for licensing university intellectu-
     al property rights to private industry, and consequently  to
     reduce  or  eliminate promising possibilities  for  economic

          The  pending  legislation  provides that  a  waiver  of
     sovereign  immunity would not avoid these  penalties  unless
     the waiver were made by the state as a whole.  For  example,
     even  if  an individual state university such  as  _________
     were willing to waive its own sovereign immunity in response
     to this legislation, that waiver would be ineffective --  it
     would  not  restore the  universitys  intellectual  property
     rights. Under the pending bill, a waiver would not be effec-
     tive unless it were made on behalf of the entire state.

          The proposed legislation would have significant,  unin-
     tended consequences.  The law would hamper technology trans-
     fer  and economic development, activities that Congress  has
     otherwise strongly encouraged, especially through the highly
     successful,  22-year-old  Bayh-Dole Act.  The  proposed  law
     would  place  a state research university in  the  untenable
     position of being a proponent in the state legislature for a
     waiver of sovereign immunity that would extend to the entire
     state.   If a state research university were unable to  con-
     vince its legislature to consent to any and all infringement
     suits against the state highway department, state hospitals,
     and  all other branches of state government, then that  uni-
     versity would effectively be shut out of technology transfer
     and  development.  That situation could cause highly  quali-
     fied faculty members to seek employment elsewhere.

          The proposed legislation is well-intentioned, but it is
     a  solution  to  a non-existent problem.   States  have  not
     hidden  behind sovereign immunity to trample private  intel-
     lectual  property  rights.  A September 2001  study  by  the
     General  Accounting  Office found that "few  accusations  of
     intellectual property infringement appear to have been  made
     against the states either through the courts or  administra-
     tively" over the last fifteen years.  Furthermore, many such
     disputes are settled out-of-court in a mutually satisfactory
     manner,  such as by obtaining a license or reaching a  mone-
     tary  settlement.   Also,  "checks and  balances"  operating
     through  political channels help to ensure that state  agen-
     cies do not disregard legitimate private rights.

          The  proposed  legislation would place  state  research
     universities at a distinct disadvantage compared to  private
     universities.  To be allowed to continue technology transfer
     activities,  a state university would be forced to  persuade
     the  state  legislature to enact legislation  affecting  the
     entire  state  government and all its agencies.   A  private
     university would suffer no such impediment, because  private
     universities could continue their technology transfer activ-
     ities  without the need for any  new,  politically-difficult
     state legislation.

          The proposed legislation would also  disproportionately
     affect  state research universities compared to other  state
     agencies.  State agencies other than universities would  not
     suffer significantly, because other state agencies typically
     do  not play a substantial role in the  technology  transfer
     and development activities that would be primarily  affected
     by the bill.

          The  proposed legislation would disregard  a  sovereign
     immunity  waiver made on behalf of an individual state  uni-
     versity.  But the laws impact could be made less drastic  --
     and  the law might in fact go further toward  achieving  its
     proponents goals -- if it were amended to recognize a waiver
     of sovereign immunity made on behalf of a state  university.
     If  a  university  need only obtain a  waiver  of  sovereign
     immunity for itself, and not for the highway department  and
     all other parts of the state government, then the waivers of
     sovereign immunity sought by the bills proponents might well
     be more forthcoming.  The agencies who actually  participate
     in  intellectual  property programs  would  waive  sovereign
     immunity,  thus  putting the players on  the  level  playing
     field that the bills proponents seek.  Then state  universi-
     ties need only take appropriate action to obtain an immunity
     waiver  on their own behalf, without being forced  into  the
     impossible position of seeking a waiver that would extend to
     the entire state government.

          We are enclosing a proposed amendment to S. 2031  along
     these  lines.  The amendment would also  recognize  immunity
     waivers made by bona fide state universities, in addition to
     a  waiver made by an entire state.  The  proposed  exception
     would apply only to bona fide state universities, and there-
     fore would not allow a state to make an "end run" around the
     intention of the legislation by placing intellectual proper-
     ty in the hands of another state agency. (We understand that
     the possibility of such "end runs" is a concern of the bills
     proponents.   The  proposed amendment  would  not  recognize
     them.)   The amendment would also delay the effective  dates
     by  an  additional 12 months, to allow  sufficient  time  to
     enact  legislation (or other appropriate form of waiver)  at
     the state level.

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