Patents on ordinary inventions and subject inventions

We have discussed “of a contractor” in Bayh-Dole’s definition of “subject” inventions. But that’s not the only place in Bayh-Dole where we get restrictions that at first might look like mere repetition. Consider this passage from 35 USC 200, the statement of “Policy and objective”:

to use the patent system to promote the utilization of inventions arising from federally supported research or development

The part restricting the policy and objective to inventions made in federally supported research is clear. But look at the middle part–use the patent system to promote the use of inventions. What does this middle part do? If it is surplusage, then it merely states that one use of the patent system is to promote the use of inventions. But that means that we can just take the words out:

use the patent system on inventions arising from federally supported research or development

That would be a mandate to file patent applications on subject inventions. But that’s not what Bayh-Dole is about. It does not require a patent application for every subject invention. The wording here furthermore is not in the form of permission–not “you may use the patent system.” Nor is it a statement regarding use of inventions. It is not

use patents to control use of inventions….

Which again would be stating a truism–that patents are used to control the use of inventions.

And for all that, when people cite this policy, they often leave off the use of the patent system and turn it into “to promote the utilization of inventions”–as if the patent system is a different issue altogether:

use the patent system and promote the use of inventions

That amounts to patenting stuff and advertising the availability of licenses that would permit the use of inventions–and of course that’s just what most university administrators do, so it might be expected that is also what they would say that the law means. But this is not it at all. The policy and statement is clear that it is the patent system that is to be used to promote the use of subject inventions.

What then does it mean to “use the patent system to promote the utilization of inventions”? Clearly, this is a restriction on the possible uses that the patent system can be put to. One might use the patent system to exclude others from using an invention. One might even use the patent system to prevent all use of an invention. One might use the patent system to force others to cross-license their inventions. One might use the patent system to create a monopoly charging monopoly prices. One might use the patent system to tie the use of an invention to the purchase of unrelated goods and services.

Any of these uses of the patent system are generally legal and we might then assume that if legal, they are intended to contribute to the public welfare if not overtly then theoretically and if not theoretically then at least mythically in the form of an invisible hand that eventually rights all moral wrongs into an economic right. If Congress had wanted, simply, that inventions made with federal support got patented, there is an easy way to say that directly.

Let’s break things down. What does it mean to “promote” utilization? What does “utilization” mean? Let’s take “utilization” first, as this part is straightforward. Bayh-Dole takes up utilization in the definition of “practical application” (35 USC 201(f)):

The term “practical application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

The definition has five distinct parts:

  1. the invention is being used
  2. that use can be established
  3. the use results in benefits
  4. the benefits are available to the public
  5. on reasonable terms

That is what Congress intends by “utilization”–use the patent system so that there is practical application. Anything else–money-making, preventing stuff from reaching a commons, suing companies for infringement–is secondary to this objective. If a use of a subject invention does not meet these elements of the definition of practical application, then then the invention is not being “utilized” according to the policy and objective of Bayh-Dole.

Now for “promote.” The verb has multiple meanings. It is worth noting that the patent clause in the Constitution also uses “promote”–as in “to promote the progress of the useful arts.” Here’s the definition from Thomas Sheridan’s Dictionary, c. 1780:


“To forward, advance, elevate, exalt, prefer.” Here’s the modern Merriam-Webster’s definition:


In our passage, which is modern but still in English, we might read “promote” to mean to “contribute to the use of” or “help bring about the use of.” It is difficult to think that Congress merely wished for the patent system to advertise the use of subject inventions. It was not “use the patent system to advertise that a patent on a subject invention is available for royalty-bearing licensing.” Nor is it “use the patent system to make use of inventions more important or valuable than otherwise.” Either of these two alternatives, however, does have its place–patents do make invention descriptions available, and one can use a patent to increase the monetary value of an invention to the patent owner, just as one can increase the value of blankets after a hurricane by having a monopoly on the supply–though, there, it is called price gouging and frowned upon.

If we go with “contribute to the use of” as a reading of “promote” we arrive at Congress’s intent–“to use the patent system to contribute to the use of inventions made with federal support.” Of all the possible uses of patents, this is the one that Congress singles out as appropriate for subject inventions. The policy of Congress is placed through Bayh-Dole formally into federal patent law. A subject invention is defined by patent law. The policy and objective for the use of patents on subject inventions is to contribute to their practical application.

There’s a parallel to the string of executive orders that constrained the IPA system. Instead of an executive branch policy, Bayh-Dole asserts a legislative branch policy that takes precedence. Where previously university administration (to use the IPA word for it) of subject inventions was constrained by an executive order–in particular, Kennedy’s 1963 Statement of government patent policy–we now have a different framing document, that of 35 USC 200. 35 USC does not merely provide insight into Congress’s intention–it provides the frame within which patents on subject inventions must be administrated. Where an executive order dictates the scope of a federal agency’s authority, however, 35 USC 200 also dictates the scope of property rights in any patent on a subject invention, regardless of who owns that invention.

This is a significant change. Where the IPA constructed a public covenant that ran with the administration of any (ordinary) patent on a subject invention, Bayh-Dole breaks the public covenant up into two pieces–one piece runs with the standard patent rights clause and concerns the formalities of administration as between a university and a federal agency, but the second piece runs with the property rights of the patent and concerns the formalities as between the patent owner and the public. It is this second piece that dramatically alters what can be done with a patent on a subject invention. The standard patent rights clause no longer serves the function that the IPA did–with limits on exclusive licensing and time periods in which practical application must be achieved if owning a patent on a subject invention is going to serve any public purpose. Instead, this function is passed to the property right in the patent on a subject invention and the definition of practical application.

Bayh-Dole, as a part of federal patent law, changes the scope of property rights for patents on subject inventions. It does so by establishing that the administration of patents on subject inventions is to promote the practical application of subject inventions–that is, the five-part definition. These are the uses of the patent property right available to owners of patents on subject invention. Any other use is outside the scope of the property rights created by federal patent law. Here’s 35 USC 261:

Subject to the provisions of this title, patents shall have the attributes of personal property.

For subject inventions, we can read this to mean:

Subject to 35 USC 200-212 in addition to everything else in patent law, patents on subject inventions shall have the attributes of personal property.

In particular, 35 USC 200 and the definition of practical application limit what property right a subject invention patent owner has. These are not the rights of any ordinary patent, nor is the use of the patent system allowed any ordinary use. If a use of the patent system does not promote the practical application of a subject invention, then it’s not within the patent owner’s property right. In the same way, was not within a federal agency’s authority under the Kennedy executive order to permit a university to do just anything with a patent on a subject invention. But under Bayh-Dole, the constraint is moved to patent law.

One then arrives at a realization that a patent on a subject invention is a very different thing than an ordinary patent. The patent system, for a subject invention, is directed expressly at promoting use of subject inventions, and not just any use, but use that meets a five-part test–publicly established use with benefits available to the public on reasonable terms. Any exploitation of a patent on a subject invention that fails to promote such use is outside the authority of patent law, outside the property rights granted to an owner of a patent on a subject invention. No federal agency then must have the responsibility to march-in on such matters because to do so is a matter for the Department of Justice (if it’s a matter of anti-trust) and a matter for the courts (to the extent that someone has been damaged by patent misuse).

35 USC 200 means something–it is not just explanatory text that reveals the wisdom of Congress as if it were “bonus material” on a DVD of your favorite movie. It is a part of federal patent law, and the policy that’s stated is that the patent system is used to promote practical application of subject inventions. That restriction is not optional, not merely illustrative, not an example among many to show what Congress prefers–it is operative, limiting. It establishes a public covenant that runs with any patent on a subject invention. That public covenant limits, then, the use of the patent system. In particular, the public covenant expressly limits the use of the patent system to prevent use. This is a brain-cracker for clever folks fixated on extracting monopoly value from patents. They will mutter, “Why making money is what patents are for–what the morally comforting invisible hand is all about, patting us on the back to assure us that whatever might appear nasty, crude, and self-serving really is for the public good all along.”

Yet this is the problem. Patents on subject inventions must promote use, not deny it. Thus, infringement actions based on the property rights in subject inventions cannot simply state the cause as infringement. Infringement implies use. The infringement must be a failure to achieve practical application, such as using the invention in a harmful, non-beneficial way, or not providing benefits to the public on reasonable terms. That is, the cause of action cannot be infringement alone. There must be also a matter of public welfare set forth in the property rights that bound a patent on a subject invention. Stanford, had it had standing to sue Roche over its property right in a subject invention, could not have done so for infringement, since Roche had achieved practical application–making the benefits of the invention available to the public on reasonable terms. The federal purpose of the property right in the patent was satisfied. There is no standing to sue Roche to prevent practical application. The right available is to promote practical application. Litigation is authorized when someone is not practically applying, but has promised to. That’s what the public covenant that runs with patents on subject inventions is all about.

There is at least one situation in which infringement litigation is warranted–if an invention requires substantial private investment for it to be practiced by anyone, and once a company has made that investment under an exclusive license, then there is reason to permit that company to recover its investment, provided that it makes the benefits of the invention available to the public on reasonable terms. Even then, there’s still the question of whether multiple companies, had they been given the chance would have invested the funds necessary to bring a subject invention to the point of practical application, and whether an exclusive licensee should enjoy monopoly benefits well after it has recovered the costs of development. With those qualifications, it is reasonable that an exclusive licensee, having made a significant investment that otherwise would not have been made, should benefit from that investment.

Thus, the property rights in a patent on a subject invention are remarkably different from those in an ordinary patent. For a “subject patent” owner to have the standing to sue for infringement, the owner and its licensee(s) must have achieved practical application, and do so with private investment that others are unwilling to make. If someone makes their own private investment anyway, before licensed companies have achieved practical application, it is clear that not only was no patent necessary for investment to be made, but also that a company was willing to make the investment despite the presence of patents. Unlike ordinary patents, which allow a patent owner to exclude others regardless of the owner’s own efforts to develop the invention, a patent on a subject invention carries with it a public covenant that permits the exclusion of others only when the patent is necessary to promote practical application.

This, then, is the meaning of “to use the patent system to promote the utilization of inventions arising from federally supported research or development.” If the patent system cannot be so used, then its use is not authorized. If the patent system is used, then its use is restricted to the stated goal, as a matter of Congressional policy and federal patent law. That restriction applies regardless of who owns the patent–the inventors, a university, a small company. (It’s not clear at all that an executive order extending Bayh-Dole to large companies can do more than require federal agencies to use the standard patent rights clause in all such funding agreements–it does not mean that large companies are also under the same public covenant as the patent owners identified expressly in federal patent law. Congress can change the scope of a law. As far as I know, the executive branch cannot.

That no-one has raised the public covenant as a defense enboldens the university owners of patents on subject inventions and their speculative partners to ignore 35 USC 200 and sue as they please. When Stanford sued Roche, it was not over the public welfare–it was over money, and what Stanford wanted was about a quarter billion dollars. In essence, Stanford argued that Roche wasn’t charging enough and the public should be charged more. The same appears to be true with Caltech’s suit against Broadcom and Apple. Subject inventions are involved. Caltech’s patent rights under 35 USC 200 do not give it standing to sue anyone to prevent use or to threaten to prevent use. Only to promote use. That’s the difference between a patent on an ordinary invention and a patent on a subject invention.

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Bayh-Dole’s management of title

There is no need for “of the contractor” in the definition of subject invention if a subject invention is just any invention made within the scope of a funding agreement. 

The US Supreme Court looked at the definition of subject invention in Bayh-Dole and held that “of the contractor” did mean something–“of” meant “owned by,” so “of the contractor” restricted the definition to those patentable inventions made with federal support that the contractor owned. The definition did not presume that the contractor owns all patentable inventions made with federal support. Just the opposite: the definition divides inventions into those that are owned by the contractor and those that are not owned by the contractor. The definition also does not operate to assign or vest all patentable inventions made with federal support to the contractor. It simply distinguishes between some inventions (those that are patentable, made within scope of the funding agreement, and owned by the contractor) and other inventions. The definition, appearing in federal patent law, makes patents on subject inventions a new category in federal patent law with its own boundaries of property rights, different from those of other patents.

The IPA approach worked this same territory, but did so with greater clarity. Continue reading

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Saving Bush

Over at the Science of Science Policy discussion group, there was a brief flurry regarding Dan Sarewitz’s article in The New Atlantis, “Saving Science.” Here is what I posted in that discussion:

Militaristic research directors demanding disciplined obedience don’t appear to have done any better in advancing science than managerial ones fussing over merit and efficiency. Sincere research directors give impassioned talks about their sincerity, but that too isn’t of much help. Climate science is fully aligned with political goals–“post-normal” science and all–and so spins data and gins up models that produce the desired pronouncements in support of policy demands. Clinical research is well aligned with corporate interests, but John Ioannidis argues there’s little in the findings that’s right–or that’s useful even when right. We appear to have a well funded exercise in quantitative confirmation biases and halo effects. Continue reading

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Has Bayh-Dole Been Successful?

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Georgia on my mind

At the University of Georgia, the Office of the Vice President for Research has a bizarre reading of the Bayh-Dole Act:

The Bayh-Dole Act, passed in 1980, makes it possible for the federal government to assign its patent rights to universities, which then have the obligation to pursue intellectual property protection and commercialization. Prior to Bayh-Dole, only a handful of universities had technology commercialization offices.

I have highlighted some text to consider.

federal government to assign. Yes, it’s in Bayh-Dole, but only with regard to inventions made jointly by contractor personnel and federal employees. Here’s 35 USC 202(e): Continue reading

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Say so long to your abusive patent policy

Let’s be blunt. The compulsory, comprehensive, portfolio approach to university invention management is a disaster.

  • It has a rate of 0.1% to 0.5% producing new products.
  • It is 100x less effective than the approach it displaced.
  • When you try to use it to make money, you lose friends.
  • When you ever do make money using it, you lose friends.
  • You lose money unless you are lucky once a decade.
  • And most of you are unlucky: you are wasting your money.
  • It prevents research from reaching the commons.
  • It creates bitterness wherever it goes.
  • It is based on compliance, not confidence.
  • It has destroyed the private network of invention support.
  • It has displaced assistance with procurement.
  • It is expensive, complicated, next to useless.
  • It co-opts rather than encourages innovation.
  • It is built on a pack of lies.

Skip the unsupportable spin and happy talk and selective metrics and bullshit about Bayh-Dole and how innovation has to happen through commercialization–meaning lots of failed profit-seeking from patent positions. 1 product in 1,000 inventions, if you are lucky. Your lucky product has to sell north of $3b just for you to break even on your cumulative office costs. Fat chance. Isn’t it time you pull out of this abusive relationship? Don’t you hate coming into work each day, knowing that you live with a drunken patent practice that is destroying your life? You don’t have to be trapped on Grey Street. It’s time to change. You have to do it.

  1. talk to the faculty senate
  2. end compulsory ownership
  3. introduce public covenants tied to projects
  4. look to equities, not ownership
  5. let people pay you because they want to

‘Nuff said. It’s easy once you have the courage to act. Say so long to your crappy policy. And on the other side, there is a great sense of accomplishment, relief, restoration, focus. Oh, yeah, and the now funny, bombastic fuss of all the second-rate speculators you chased off. Good on you. Choose to do something for your people rather than be someone who climbs up through the organization. Do it. Stop living a dream believing things that just ain’t true.

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Change state law

Restoring voluntary assignment for university inventors is the first step in reconditioning university invention management–and putting that management on a road of development consistent with university mores and roles. Voluntary assignment can be accomplished a number of ways. I will outline a few here.

  1. correct interpretation of policy–often policies are drafted with a narrow scope on claims but that scope has been expanded by administrative interpretation
  2. change policy–often the change does not have to involve dramatic redrafting
  3. change acceptance practice in the IP office
  4. implement (f)(2) properly for subject inventions
  5. change state law (for public universities)

We have looked at a number of ways to restore voluntary assignment of inventions in university research enterprise. Let’s turn now to another approach to creating a voluntary invention assignment policy at universities. This time we will focus on state law and public universities.

Bayh-Dole has many defects. But one of its virtues is that it does not dictate to universities anything about whether they must own inventions made with federal support–subject inventions–or what they must do with inventions they do acquire, other than that they must use the patent system to promote practical application. Universities don’t have to own, don’t have to license, don’t have to license exclusively when they do license, don’t have to exclude research uses, don’t have to require a royalty, don’t have to even have a capability to manage patents, don’t have to have a patent policy. It’s all wide open for diverse practices, experimentation, and adaptation to changing conditions.

Universities have ignored all this freedom and rushed for a particular version of patent management–portfolio-based speculation on the future value of the patents, rather than agent-based efforts to place subject inventions so they may best be used. Continue reading

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Common bits of faux Bayh-Dole bullshit

Faux Bayh-Dole has been defacto federal research innovation policy now for thirty-five years. The real Bayh-Dole is sketchy enough, but the faux version is downright vile. Here are some “truths” of faux Bayh-Dole that are, in reality, simply not true. We could call them lies, except those repeating them don’t think they are untrue. They don’t have a regard for the truth–thus, it’s what Frankfurt would call “bullshit.”

As one senior university official blithely told me with regard to a compliance requirement (in that case, implementing the (f)(2) agreement), “We will do that when the feds tell us we have to.” And that was 1989. That’s the attitude university officials take to all of Bayh-Dole–the only parts they “enforce” are the ones that make it appear that they have a right to take any invention they want–either because Bayh-Dole requires or permits it, or because if they don’t then perhaps in some strange way they might not comply with Bayh-Dole, or because inventors might not realize that something is inventive and so would fail to comply with Bayh-Dole.

So the middlemen take all inventions, patentable or not, and pin it to compliance with Bayh-Dole. But it’s faux Bayh-Dole. And the feds have let it happen. Either this is what they, too, desire, or they just don’t care. Either way, it bodes ill for universities, research, and innovation.

Here are some common bits of faux Bayh-Dole bullshit. Together, the faux bits form something of a religious belief system, a sect of middlemen, as it were. Continue reading

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Would an Apple and Broadcom v Caltech case deliver a second pounding to faux Bayh-Dole?

In Bayh-Dole, the public covenant that runs with patent rights in subject inventions is not as well developed as it was in the Institutional Patent Agreements. It is still there, but it has been broken up into pieces to make it more difficult to reconstruct. In the IPA approach, federal contracts are made within the framework Kennedy’s Statement of Government Patent Policy. Bayh-Dole’s framework is 35 USC 200–“Policy and objective.” It’s just that the relationship between section 200 and the rest of Bayh-Dole is not made express. It’s easy enough to read section 200 as a rationalization for what follows, a set of hopes for the law rather than a policy framework that contracting and practices must stay within. But if section 200 is read as a rationalization, then it is mere surplusage, adding nothing to the law.

It is important that section 200 is placed in federal patent law, unlike Kennedy’s Statement, which is a directive of government policy. The connection between section 200 and the standard patent rights clause that Bayh-Dole authorizes comes by means of a restriction on the property rights available to the owner of a patent owner. Here is the basic calculus: Continue reading

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The Public Research Patent Covenant–Narrative Version

The Institutional Patent Agreement approach to patent rights arising from federally supported research carries with it a public covenant, a set of conditions that run with each patent on a subject invention that place limits on the property right represented by the patent. Over 70 research universities eventually adopted the IPA scheme before Bayh-Dole dismantled it. If we made the argument in prose rather than in the form of legal clauses in a master agreement, the IPA public covenant looks something like this:

The federal government supports research at universities which may result in patentable inventions and discoveries. That research may expand the frontiers of science or solve problems faced by the public, such as in public health or national security. The public interest is generally served when the results of such research are published and made broadly available for use and development, including the creation of commercial products.

The federal patent system is based on the premise that inventors, if they enjoy for limited times exclusive rights to their inventions, will promote the progress of the useful arts by developing their inventions and introducing them into public use. Thus, it is expectable that patents may play a beneficial role in the development of inventions supported with federal funds designed to improve the capacity of universities to support research in the public interest.

The patent system, however, is not perfectly suited to the specific objectives of federal funding. Continue reading

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