Here’s another misrepresentation of Bayh-Dole by a university technology transfer office:
The Bayh-Dole Act (1980) requires universities to report all inventions arising from federally supported research, and to diligently pursue patent protection and commercialization for new technologies that are commercially promising.
Seven big time problems in a single sentence! Such density!
(1) Bayh-Dole does not require universities to report all inventions arising from federally supported research. Bayh-Dole requires disclosure only of *subject inventions*–inventions that a contractor owns and which were made under contract. If a contractor does not own the invention, then it cannot be a subject invention, and is not therefore subject to the disclosure provision of Bayh-Dole’s standard patent rights clause. 35 USC 201(e). Stanford v Roche. Continue reading
We are working through another unhelpful NIAID document on Bayh-Dole. With such ubiquitous misinformation put out as authoritative, it is no wonder that Bayh-Dole has become an excuse for what amounts to ad hoc law, created by wonderful agreement between federal agencies and university administrators to make a private agreement to disregard the law and do whatever sounds good, so long as paperwork is maintained for appearances and everyone shows mock fear of the consequences of non-compliance, even though there are no consequences to non-compliance (although there certainly are for making a federal agency look bad).
More from NIAID’s misguidance on Bayh-Dole:
you (the inventor with the permission of your employer and the funding federal agency) may be allowed to submit a patent application to the United States Patent and Trademark Office (USPTO).
Here is the Bayh-Dole provision that mystifies NIAID (35 USC 202(d)):
If a contractor does not elect to retain title to a subject invention in cases subject to this section, the Federal agency may consider and after consultation with the contractor grant requests for retention of rights by the inventor subject to the provisions of this Act and regulations promulgated hereunder.
The Supreme Court cited the “retention of rights by the inventor” to mean that the inventor had ownership of the subject invention. An inventor could not “retain” rights without already having them. The Court’s reading is consistent with the idea that inventors are also parties to the funding agreement. They are, by definition, contractors subject to a patent rights clause authorized by Bayh-Dole. The problem is that “contractor” referenced in 35 USC 202(d) is not the owner of the subject invention. Continue reading
Previously, we have looked at a thoroughly misinformed NIAID document on Bayh-Dole. Let’s look at another document from NIAID, “Intellectual Property Considerations for Contracts,” published in Funding News, April 2, 2015. The document may come up “Access Denied” in a browser search, but it is still available via the Google cache. Perhaps by the Wayback Machine as well. The document provides guidance for the uninformed with regard to federal contracts for research, apparently with the intent to keep the uninformed uninformed:
When it comes to research and development (R&D) contracts and intellectual property (IP), there are a number of issues you should be aware of, such as rights, regulations, and responsibilities.
To help you acquaint—or reacquaint—yourself with the essentials, we’ll cover them in this and future issues. We begin with one key type of IP: inventions.
So far, so good.
According to 35 U.S.C. 201 of the U.S. Patent law as implemented by the Federal Acquisition Regulation (FAR) 52.227-11 Patent Rights-Ownership by the Contractor , an invention is “any invention or discovery that is or may be patentable or otherwise protectable under title 35 of the U.S. Code.”
Well, not quite. Here’s 35 USC 201(d):
The term “invention” means any invention or discovery which is or may be patentable or otherwise protectable under this title or any novel variety of plant which is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.).
Our NIAID document leaves out the PPVA extension for invention. PPVA protection is not within federal patent law. Bayh-Dole extends to PPVA apparently through a slip or cleverness with regard to the treatment of plants as patentable subject matter. In any event, the point of the definition is to limit the scope of “invention” in federal funding agreements to patentable elements plus the PPVA. An invention cannot be broader than its patentable elements. That’s interesting. And includes PPVA stuff which is not patentable. That’s interesting. But perhaps this is all just being picky. Read on. Continue reading
Posted in Bayh-Dole
Bayh-Dole has to be broad
Bayh-Dole’s scope has to be as broad as the broadest federal statute or regulation pertaining to federal rights to inventions.
In Bayh-Dole, “subject invention” is defined broadly to include conception or first actual reduction to practice, not just what gets patented first
“Contractor” is extended to all parties to funding agreement including those added by assignment, substitution of parties, and subcontract
“Made in the performance of work” applies to the overall project not just the federally funded part
Without this broad scope Bayh-Dole cannot uniformly preempt federal statutes and regulations whenever a contractor acquires ownership. Continue reading
For Bayh-Dole’s preemption to operate “uniformly,” Bayh-Dole’s scope has to be as broad as any federal statutes and executive branch patent policy. Since those statutes and executive branch patent policy do not worry who has ownership of any invention “arising in federally supported research or development,” then Bayh-Dole also must extend to any owner of any such invention. If the federal government could claim an ownership interest in the invention, Bayh-Dole must be there to preempt that federal interest for any owner of any such invention and substitute Bayh-Dole’s apparatus.
We can distinguish four sorts of owners of an invention made with federal support: inventor, contractor, subcontractor, and assignee. Bayh-Dole’s patent rights clause, then, must reach to each of these four sorts of owners. Here’s how Bayh-Dole does this.
First, the definition of funding agreement (35 USC 201(b)) is expressly extended:
Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.
When a contractor makes any assignment, the funding agreement necessarily extends to include the assignee. The assignee becomes a party to the funding agreement. By definition (35 USC 201(c)), each party is a “contractor.” As a party to the funding agreement, each party is necessarily bound by a patent rights clause. The same is true for substitution of parties (inventors, mainly) and for subcontracts. Continue reading
In the implementation of Bayh-Dole, then, employee-inventors own unless they assign rights to the Contractor. We can use “Contractor” with a capital “C” to follow the usage in the Federal Procurement Regulation’s patent rights clause that implements the Nixon patent policy.
If employee-inventors assign to the Contractor, then the standard patent rights clause at 37 CFR 401.14 applies. If they do not assign, then the inventor patent rights clause at 37 CFR 401.9 applies. If they are not contractors–that is, not parties to the funding agreement–then they are not subject to the funding agreement, and neither 37 CFR 401.14 or 37 CFR 401.9 applies. Bayh-Dole provides no compulsory mechanism for inventions to become subject inventions other than the standard patent rights clause’s requirement that Contractors require employee-inventors to make a written agreement that makes those employee-inventors parties to the funding agreement. Inventions become subject inventions in Bayh-Dole because inventors are parties to the funding agreement, not because Contractors force them to assign their inventions.
It’s just that Contractors do not comply with the (f)(2) written agreement requirement, and so employee-inventors are routinely not parties to federal funding agreements, their inventions made with federal support are not subject inventions, and due to the fine mess of amendments and presidential memos and executive orders demanding Bayh-Dole rather than a more general policy, there is no other mechanism by which the federal government has an interest in such inventions–not by specialty statutes, and not by the now superseded Nixon patent policy. Continue reading
President Reagan’s Executive Order 12591 does one more odd thing. It makes the contractor’s title to patents conditioned on a government license. But this government license is not the one required by Bayh-Dole. Here’s Bayh-Dole (35 USC 202(c)(4)):
With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world:
in exchange for royalty-free use by or on behalf of the government;
Well, “practice” is not “use.” In the Kennedy patent policy, “practice” is defined as “make, use, and sell.” In the Nixon revision to the Kennedy patent policy, “practice” is replaced by “make, use, and sell.” To “practice” an invention means to undertake any of the activities that are subject to an inventor’s exclusive control–the substantial rights in the invention as set forth in a patent. The Reagan revision to Nixon substitutes “use” rather than Nixon’s “make, use, and sell.” In effect, Reagan stipulates a much narrower government license for large companies gaining title to patents on inventions made with federal support than does Bayh-Dole. Furthermore, Reagan stipulates this narrower scope of license for all inventions not owned by any contractor but made under federal contract. Continue reading
So far we have discussed the Reagan executive order mandating the promotion of commercialization (something not in Bayh-Dole) by having federal agencies grant title to patents to all contractors–not just to large companies that otherwise operated still under the Nixon patent policy of 1971. Reagan’s executive order of course cannot unilaterally amend Bayh-Dole. It can, however, unilaterally amend the Nixon patent policy to make the defaults under that policy for large companies be the same defaults that small companies and nonprofits have under Bayh-Dole: if a large company gains ownership of an invention made under contract, that company too can elect to retain title, subject to the public interest provisions of the patent rights clause (which are not enforced).
What the Reagan executive order doesn’t make obvious is that under the Nixon patent policy there are two sorts of company contractor–(1) companies that have established nongovernmental commercial positions; and (2) other companies. A company in category (1) makes and sells products other than to the government. A company in category (2) either does not make and sell product or does so only to the government. Such category (2) companies include contract research organizations that exist to get contracts and deliver back research results including any inventions that may have been made in the course of the research. Reagan’s executive order mandates that these category (2) companies are granted title to patents (or, perhaps Reagan really meant inventions) regardless of whether the companies have commercial expertise or market position. That’s a strange way to get about commercialization. Add companies that don’t have any expertise. The Harbridge House report (1968) found that organizations without expertise were half as likely to succeed at commercialization of federally supported inventions.
The Reagan executive order provides a further revision of the Nixon patent policy. The Nixon patent policy stated a default of federal ownership in four areas, regardless of what the market status of any contractor might be. The federal government should own when (i) a federal agency intended to develop products to the point of practical application, or (ii) when the federal government was the primary user and contractor ownership might set the contractor up as dominant, or (iii) in research directly concerning public health, safety, or welfare); or (iv) when the contractor was operating a government-owned lab or directing the work of others. The Reagan executive order preempts these conditions for all contractors that would otherwise be subject to the Nixon patent policy requirements.
The effect is somewhat consternating. Continue reading
In 1987, President Reagan issued Executive Order 12591, which extended, sort of, the Bayh-Dole Act to “all contractors.” Let’s work through EO 12591 and try to sort out this “sort of.” It’s rather a mess. In doing so, we end up with something remarkably simple and direct to say about Bayh-Dole. It is worth working through the details to show how it comes about.
Here’s the relevant bit of Reagan’s EO 12591, with some parts in bold to mark points of interest:
(4) promote the commercialization, in accord with my Memorandum to the Heads of Executive Departments and Agencies of February 18, 1983, of patentable results of federally funded research by granting to all contractors, regardless of size, the title to patents made in whole or in part with Federal funds, in exchange for royalty-free use by or on behalf of the government;
Let’s go down the rabbit hole. Reagan’s February 18, 1983 Memorandum, however, does not mention commercialization. Here:
To the extent permitted by law, agency policy with respect to the disposition of any invention made in the performance of a federally-funded research and development contract, grant or cooperative agreement award shall be the same or substantially the same as applied to small business firms and nonprofit organizations under Chapter 38 of Title 35 of the United States Code.
Other than that Bayh-Dole is Chapter 18, not Chapter 38, of federal patent law, the memorandum extends at least some Bayh-Dole treatment to any contractor not otherwise specified by Bayh-Dole–any contractor other than a small business or nonprofit. T Continue reading
One cannot read “contractor” in Bayh-Dole and assume that “contractor” only refers to the initial or prime contractor. One must always look to the circumstances of a given contract to determine whether others have been made parties to the funding agreement. A contractor may add parties to a funding agreement by any assignment, substitution of parties, or subcontract of any type. Let’s work through some examples. We will start with more overt examples and then look at stuff that is not what you find in the usual glossy accounts of Bayh-Dole.
Consider some examples.
(1) Nonprofit subject invention assignment. Bayh-Dole requires federal agencies to require nonprofit organizations, if they assign a subject invention, to require the assignee to comply with the nonprofit’s patent rights clause. See 35 USC 202(c)(7)(A):
In the case of a nonprofit organization, (A) a prohibition upon the assignment of rights to a subject invention in the United States without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions (provided that such assignee shall be subject to the same provisions as the contractor)
This provision then shows without the second set of parentheses in the standard patent rights clause at 37 CFR 401.14(k)(1).
Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions, provided that such assignee will be subject to the same provisions as the contractor;
If a nonprofit assigns a subject invention to a company, even under the cover of an exclusive patent license, the company becomes a party to the funding agreement–becomes a contractor–and any inventions made by the company made by the company arising from federally supported research or development are also subject inventions. Furthermore, the company is obligated to handle those inventions under the nonprofit patent rights clause. Specifically, the company-assignee agrees–as a party to the funding agreement–to dedicate income earned with respect to subject inventions to the specified public purposes. Continue reading