How does the Bayh-Dole Act apply to inventions made using equipment purchased with federal funding?
Here’s the thing–Bayh-Dole applies to inventions owned by a contractor–a party to a federal funding agreement for research or development. If the inventor is not a contractor and does not assign an invention made using contractor equipment purchased with federal funds to a contractor operating under a federal funding agreement, the invention cannot be a subject invention. Bayh-Dole doesn’t come into play. See the definition of subject invention, 35 USC 201(e). See the Supreme Court decision in Stanford v Roche.
Furthermore, nothing in Bayh-Dole requires a contractor to demand assignment of inventions, even inventions made on equipment purchased with federal funds. Even if those inventions were made under the same funding agreement through which the equipment was purchased.
There’s no assignment requirement in Bayh-Dole. In the standard patent rights clause authorized by Bayh-Dole, NIST has placed an assignment clause, but it is directed only to subject inventions–inventions a contractor already owns! Figure that. And no matter, no university I know complies with the standard patent rights clause on this point. Continue reading
The NIH has published comments on the NIST changes to the regulations that implement the Bayh-Dole Act and the standard patent rights clause. Jamie Love at Knowledge Ecology International calls out in a tweet a passage in the “Background” section in those comments. The passage is pretty much the entire “background.” Let’s have a look at what the NIH says about Bayh-Dole:
Recipients of NIH funded research awards are required to report all inventions that result from NIH funded projects. See the Bayh-Dole Act at 35 U.S.C. § 200-212.
The Bayh-Dole Act permits all funding recipients i.e., universities, nonprofit research institutions, and large and small businesses to retain ownership of the inventions made under federally funded research grants or contract programs, while also giving the government a license to practice the Subject Invention. In return for retaining ownership, funding recipients are required to pursue the invention to practical application, such as by licensing the invention under reasonable terms for the benefit of public health whether the invention is patented or treated as an unpatented biological material or research tool.
Pretty much every statement here is untrue, misleading, or deceptive. If you see how, good for you. Go do something important in the world or relax with your friends and family–that’s important, too. Your work here is done. If not, or you can’t help but be curious, read on at your peril.
Recipients of NIH funded research awards are required to report all inventions that result from NIH funded projects. See the Bayh-Dole Act at 35 U.S.C. § 200-212.
That’s not true–at least not with respect to the Bayh-Dole Act. Bayh-Dole requires federal agencies to use a standard patent rights clause that requires contractors to disclose subject inventions–inventions that the contractor owns. Not all inventions. See, here at 35 USC 202(c)(1): Continue reading
I wrote a Quora answer to the question “What are the alternatives to intellectual property?” I cross-post it here.
Let’s divide things into intellectual property (IP—patents, copyrights, trademarks) and non-IP intangible assets (NIPIA). NIPIA assets include all sorts of things—things you know but keep secret (broader than a trade secret), complexity, centrality in a network, quality of weak ties—who you know but who doesn’t know you really well—recognition of a distinctive opportunity, luck, likability, articulateness, timing, leverage (BATNAs—great alternatives to negotiated agreements), selectiveness of who you choose to deal with.
Let’s look at some of these bits of NIPIA. The idea of the patent developed in response to trade guild secrets. “Come to our city state with the secrets of your trade guild in a competing city state and we will give you a monopoly in our city state.” Later, the patent serves as an encouragement for inventors to both publish and teach inventions that might otherwise languish through disinterest—a sort of secret that’s not a trade secret because there’s no effort to prevent disclosure, just a disinterest. So, don’t blab what you know. Be selective who you show your ideas and your work to. A patent is a blab that gives people a chance to design around you, obtain patents to block development of your invention, undermine you, exclude you from standards.
Complexity is a wonderful bit of NIPIA. Composers can (and have) limited the opportunities of musicians to copy their work by composing works that only select musicians have the capability to play. If someone wants to practice for years to have the chance to join the elite few, more power to them. You know—Eddie Van Halen doesn’t need a copyright in “Eruption”—go ahead and try. More broadly, there is a “mystery” to excellent craft that transcends textbooks, published patents, and the like. The medieval craft guilds understood this, too. Magicians and card sharks know it. If someone rises to that level of excellence, those with excellence can see it, and those who lack the mystery usually cannot distinguish excellence from fakery. Continue reading
If we return for a moment to O’Connor’s article–it is a great read for what it aims to do, but for O’Connor’s theme of abstract mistaken assumptions rather than providing a specific account of Latker’s lack of drafting ability–there is a set of elements that influence the direction O’Connor takes his study.
O’Connor does not take into account the role of Norman Latker and Howard Bremer, both of whom had a primary hand in developing the revived IPA program, then Bayh-Dole, and then Bayh-Dole’s implementing regulations. O’Connor makes it appear that Bayh-Dole emerged from abstract policy debates, evidenced by formal reports. In practice, however, Latker played a cat-and-mouse game with his HEW supervisors to end-run public policy with what he considered a better policy–delivering inventions made in NIH-supported work as patent monopolies for the pharma industry, using gullible university administrators as the lusty enablers.
Furthermore, O’Connor apparently imagines that university administrators bumbled along attempting to make sense of all the complexity of Bayh-Dole. But that wasn’t the case. University administrators were told what Bayh-Dole did by Howard Bremer, by the Council on Government Relations, and by the Society of University Patent Administrators, later renamed the Association of University Technology Managers. If O’Connor had been at any AUTM conference, he would have heard the repeated refrains regarding Bayh-Dole. It was announced that federal law required university inventors to assign their inventions to the university, as a formality, to comply with the law. There was no analysis of the law. Few read the law and those that did already had the idea in their head that Bayh-Dole vested ownership rights with the university. Senator Bayh as late as 2010 in his amicus brief in Stanford v Roche insisted that Bayh-Dole happily vested rights in contractors and disenfranchised inventors. The Supreme Court read the law and disagreed. Continue reading
Posted in Bayh-Dole, History, Policy, Sponsored Research, Stanford v Roche
Tagged assignment, Bayh-Dole, Federal Procurement Regulations, Latker, O'Connor, patent agreement, sly, written agreement
Sean O’Connor starts an excellent article that gives a detailed account of history behind the Bayh-Dole Act (“Mistaken Assumptions: the Roots of Stanford v. Roche in Post-War Government Patent Policy“) this way:
The Bayh-Dole Act of 1980 was built on a mistaken assumption that “contractors”—recipients of federal funding—were securing assignments of inventions from their employees.
Despite O’Connor’s arguments, I don’t find evidence for any “mistaken assumption” in the run-up to Bayh-Dole. Drafting mistakes–yes, but not ones arising from mistaken assumptions–but just plain failure to execute a plan. Whatever the executive branch patent policy was, in 1968, when Norman Latker at the NIH and Howard Bremer from the Wisconsin Alumni Research Foundation collaborated to revive the lapsed NIH Institutional Patent Agreement program, the template IPA agreement for use with nonprofits–the future targets of Bayh-Dole–included a requirement that the nonprofit have a patent agreement with employees (Section VI(a)):
The Grantee shall require assignment to it of all right, title and interest in and to each subject invention on which it elects to file any patent application for administration by it in accordance with and subject to the terms and conditions herein set forth.
Latker claimed later that the IPA provided the basis for Bayh-Dole. If that was the case, then Latker, at least, had no mistaken assumptions packed in his bags. Furthermore, when the Nixon revisions (1971) of the Kennedy executive branch patent policy (1963) were codified at 41 CFR 9-1, the required patent rights clause included a requirement that contractors have a patent agreement with employees (9-1.107-5(a)(e)(3)):
The Contractor shall obtain patent agreements to effectuate the provisions of this clause from all persons in his employ who perform any part of the work under this contract except nontechnical personnel such as clerical employees and manual laborers.
Patent agreements are agreements under which employees promise to assign their inventions to their employer. In the case of the standard patent rights clause at 9-1.107-5(a), the contractor has an obligation to assign inventions to the federal government, so to “effectuate the provisions,” the contractor has to obtain title from its employee inventors. It’s pretty clear, isn’t it? Continue reading
Here is the definition of invention in the Kennedy executive branch patent policy, 1963 (Section 4(b)):
Invention or Invention or discovery–includes any art, machine, manufacture, design, or composition of matter, or any new and useful improvement thereof, or any variety of plant, which is or may be patentable under the Patent Laws of the United States of America or any foreign country.
Essentially, an invention is what is patentable. Note “variety of plant which is or may be patentable”–not plant variety protection. This is the definition that operates across government, other than in specific statutes:
The following basic policy is established for all government agencies with respect to inventions or discoveries made in the course of or under any contract of any government agency, subject to specific statutes governing the disposition of patent rights of certain government agencies.
“Made” is given its own definition:
Made — when used in relation to any invention or discovery means the conception or first actual reduction to practice of such invention in the course of or under the contract.
These same definitions are used in Nixon’s revision of the Kennedy patent policy in 1971.
The definition of subject invention, however, is somewhat different. Here is the definition of subject invention in the IPA template, 1968: Continue reading
We are working through the 2018 version of Bio’s misinfographic about Bayh-Dole and its relationship to drug prices. Bio report metrics from an AUTM report as if they are facts. But these are not facts–they are estimates from an unvalidated model, without the ranges and without indicating that these figures are estimates for 20 years of activity, and without indicating that this activity is not at all restricted to Bayh-Dole related inventions.
AUTM doesn’t collect data on jobs or economic output and doesn’t even collect information specific to inventions made in federally supported research. The graphic doesn’t have anything specific to do with Bayh-Dole. The graphic depicts the output of an economic “model” that estimates “contribution” and “jobs” from things like royalties reported by universities. As far as I can tell, the actual model has not been published–just its “results.” Someone could go into a back room and come out an hour later with “results.”
Here’s the AUTM “report” that Bio appears to be using.
the total contribution of these academic licensors to industry gross output ranges from $320 billion to $1.33 trillion, in 2009 U.S. dollars; and contributions to gross domestic product (GDP) range from $148 billion to $591 billion, in 2009 U.S. dollars
So there’s a range to the “model.” $320 billion doesn’t look so hot, so Bio goes with the upper limit. No error bars in any of it. And that’s just an estimate of the “industry gross output”–whatever that means. Continue reading
Let’s look at a new infographic from Bio about Bayh-Dole. It’s largely the same as the old infographics. The point of the infographic is to create the impression that the Bayh-Dole Act has been wildly successful and that any effort to use the law to reduce drug prices will destroy medical innovation and hurt our military. It’s nuts. Bayh-Dole could disappear tomorrow and nothing would change. Why? No one complies with Bayh-Dole. Bayh-Dole therefore cannot be at all responsible for high drug prices. But university administrators and federal grants officers and “technology transfer” officers can be responsible at least for some drug prices being higher than they ought–for failing to comply with Bayh-Dole or to enforce the standard patent rights clause and for putting the interests of big companies and wealthy investors ahead of other interests–ahem, public interests.
Meanwhile, we can work through yet again more Bio misinformation about Bayh-Dole. If you already know it’s nonsense, don’t bother reading on. If you feel some wonder, then here’s the commentary that calls out the misinformation.
Nope on “empowers.” Bayh-Dole requires contractors to disclose inventions that they acquire and allows contractors to keep those inventions that they disclose against any claim that might be made by a federal agency. See 35 USC 202(a). Bayh-Dole does no “empowering” of anyone to “take ownership.” See the Supreme Court decision in Stanford v Roche.
Bio makes it appear that universities are given ownership of inventions “so they can license these basic inventions.” It would be nice if universities and others would license anything. Mostly, they don’t licensing much at all. Notice–Bio doesn’t report that. Further, not all university-hosted inventions are “basic.” That’s just a clever transfer from the idea that university faculty conduct “basic” research. Yes, of course they do. But they also conduct “applied” research and they even “develop” stuff for their use–as research tools, in clinics, and to demonstrate functions. Even “basic” research can result in “well developed” inventions–for instance, the needs of observational astronomy (a “basic” science) have resulted in the development (by university faculty and technicians) of a fully operational adaptive optics system (“well developed” to the point of implementation. Bio must take folks for fools to make it appear that because universities host some research that’s “basic,” then all inventions at universities are also somehow “basic.” Or that Bayh-Dole applies only to those inventions that are “basic.” No, Bayh-Dole applies to any patentable invention that a university acquires and which was made in work supported by federal funds. Continue reading
On Quora, I was asked to answer this question:
Do US intellectual property laws stills serve society or just corporations and countries that are large and rich?
Historically, patents have been the domain of countries (and city states) and the trades. That is, patents are something of an arrangement—part deal and part truce—between governments and trades regarding inventions and trade secrets. Similarly, early copyright laws were largely arrangements between governments and publishers. Authors were ancillary. Trademark—much more ancient, and much more rooted in commercial mores—appears to have always been different, being a means to manage various forms of fraud in the selling of product.
We might expect that U.S. patent and copyright laws, at least, might be made to serve both “society” and government—and also serve corporations and also serve inventors or authors. But that’s just nice theory. We might also expect that over time, as conditions change and law changes and the interpretation of law changes, the nature of the arrangement also changes. Some things in the law will lag changed conditions, and some things in the law will get exploited in ways that weren’t originally anticipated. The result is that some people who thought things in IP law were once great now complain, and some that used to complain have now got their way and are happier for it. Continue reading
Universities generally keep secret their licensing metrics. Yes, they report the number of inventions, patents, licenses, and startups in a given year–but they don’t report how those numbers relate to one another. The inventions reported in a given year have something to do with patents–but only in later years, since it takes about three years for a patent to issue, and a single invention can result in patents issuing for years thereafter through clever use of divisionals, continuations, and continuations in part, not to mention foreign counterparts of any and all of these. Similarly, licenses granted in a given year are generally for inventions disclosed in previous years. One invention might involve scores of licenses, and that might obscure the fact that many other inventions have not been licensed at all.
Given all that, here are two accounts of licensing practice that have made it into public view, along with some commentary that might help you understand what it means and doesn’t mean.
From Rima D. Apple, “Patenting University Research: Harry Steenbock and the Wisconsin Alumni Research Foundation.” At the time of the article, Professor Apple was a fellow in the University of Wisconsin department of History of Medicine. She is now professor emerita:
By 1985, the latest year for which statistics are available, WARF had seen the granting of 448 patents, of which 203 had been licensed. These have not all been financially successful: only 100 have produced income greater than expenses, and 10 alone have generated 90 percent of WARF’s royalty earnings. Yet patents, which by 1986 had brought WARF more than $30 million, account for only 20 percent of the foundation’s income. Of even more significance in the development of WARF’s substantial endowment was the skill of its trustees in investment. Under an early policy decision, WARF did not use the royalties themselves to fund research; instead, monies paid WARF were invested, and research was funded from the interest.
Dr. Apple does not provide the number of inventions WARF reviewed for management or inventions under management for which patents did not issue. According to early WARF documents–and consistent with University of Wisconsin policies until recently–inventors submitted inventions to WARF voluntarily. Instead of total inventions under management, we get the number of patents–without indication for how those patents relate to inventions. For instance, Steenbock received four patents on his Vitamin D invention(s). A similar situation involves the compounds behind warfarin, also handled by WARF. Continue reading