A note on subject inventions not disclosed under Bayh-Dole–and a place for auditors to romp and play as auditors are wont to do, if auditors were ever to romp and play with regard to anything consequential in Bayh-Dole. What follows then is a sort of fantasy because no one ever audits Bayh-Dole for anything consequential!
Under Bayh-Dole, any party to a federal “funding agreement” (a “contractor”) may extend at will the funding agreement to add additional parties to the funding agreement. See the definition of funding agreement at 35 USC 201(b).
New parties to a funding agreement may be added by “any assignment, substitution of parties, or subcontract of any type.” For instance, the (f)(2) agreement requirement in the standard patent rights clause in effect requires institutional contractors to make specified potential inventor employees parties to the funding agreement via the patent rights clause. More so, and expressly, Bayh-Dole requires assignees of nonprofit-owned subject inventions to accept the nonprofit patent rights clause–and therefore those assignees become parties to the funding agreement, and therefore contractors. See 35 USC 202(c)(7)(A).
An exclusive license to all substantial rights in an invention conveys ownership of the invention–is an assignment. There are a number of court decisions, some looking directly at university licensing practices. Most–almost all–university-granted exclusive licenses to inventions are assignments. That means that inventions made in development work by a company that has accepted assignment of a subject invention from a nonprofit, when those inventions are acquired by the company, are also subject inventions. Those inventions are just as “made under contract” or “made in performance of . . . work funded in whole or in part by the Federal government.”
How a contractor manages the scope of any federally supported project therefore has significant consequences for a determination of what work is “under contract.” A university contractor does not have to assign any subject invention to a company as part of “commercialization” efforts. That’s a university’s choice. And when it does assign, the company becomes another party to the funding agreement and any inventions made in the development work, when acquired by the company, have the same requirements as if they were made by the university itself. They are nonprofit subject inventions. Continue reading