Bayh-Dole makes information regarding the use of subject inventions a government secret. It does this in a roundabout way by requiring federal agencies to treat those reports as confidential and as the sort of information that is exempt from FOIA disclosure and on top of that requires federal agencies to agree in each funding agreement not to disclose this information, at least to the extent required by Bayh-Dole.
All this secrecy apparatus is silly. Bayh-Dole could have just specified that invention use reports are not to be publicly disclosed. Bayh-Dole does just this for reports of subject inventions and patent applications in 35 USC 205. It’s no big deal to do. Bayh-Dole could just as easily have included invention use reports there in 35 USC 205, or could have stated simply and clearly at 35 USC 202(c)(5):
Provided, That any such information shall not be disclosed by the Federal agency.
One way to read the silly secrecy apparatus is of course just this way–that all that language and layers of requirements with their inconsistencies and uselessnesses just amount to this simple clear statement. I’m sure many people do read things this way. Another way to read this apparatus, however, is that the intent of Congress was not this simple clear way and the apparatus is evidence of a different intent–if Congress had wanted to write something simple and clear, Congress surely had the capacity to do so. Well, surely may be a bit much. Continue reading
The federal government has five methods to deal with the exploitation of federally supported inventions. Let’s list them and make a few points, ending with a discussion on the value of the government’s license to “practice and have practiced” subject inventions.
- Bayh-Dole’s policy and objective limiting the scope of patent property rights.
- The standard patent rights clause.
- Exceptional circumstances modifying the patent rights clause.
- March-in procedures for nonuse, public needs, regulatory needs, U.S. mfg.
- Government “practice and have practiced” license.
Let’s work through these.
Bayh-Dole starts with a statement of policy and objectives at 35 USC 200. This is more than simply a statement of legislative purpose, as evidenced by the presence of “policy.” The policy set forth replaces the executive branch policy that governed federal agency contracting requirements. But Bayh-Dole is part of federal patent law, and the policy also changes the scope of the patent property right for inventions made with federal support. Bayh-Dole defines a new category of patentable invention–the “subject” invention. Patent law states that patents have the attributes of personal property, “subject to the provision of this title” (35 USC 261). And for subject inventions, the provisions of the title include Bayh-Dole, which is part of patent law. Continue reading
I have discussed in a number of articles the issue of exclusive license and assignment for inventions. The distinction matters under Bayh-Dole because Bayh-Dole’s standard patent rights clause (37 CFR 401.14(a)(k)(1)) forbids nonprofit contractors from assigning subject inventions other than to an organization that has as a primary function the management of inventions unless it gets federal agency approval, and even then the assignment must carry with it the nonprofit obligations of the standard patent rights clause–including sharing royalties with inventors and using any profits after expenses for scientific research or education–things that might be nice, but not the things that most for-profit organizations are willing to do with their profits from a subject invention.
A transaction becomes an assignment when the patent owner conveys “all substantial rights” in an invention to another. One way to do this is by assigning “title” to the invention. Another way, however, is to exclusively license the rights to make, use, and sell–the substantial rights in the invention.
A slide deck by Joshua Rawson and Thomas Rayski on “Critical Mistakes to Avoid in Intellectual Property Licensing” provides a useful slide that lays out the situation. I’ve messed up their slide by circling the key categories. Continue reading
We have looked at Bayh-Dole and at FOIA. The upshot is that the 1984 amendment that changed Bayh-Dole’s secrecy requirement at 202(c)(5) from “may” to “shall” apparently fails to meet the requirements of FOIA for withholding information. 202(c)(5) does not state that such information is secret. 202(c)(5) does not require an agency to contract to agree not to disclose information otherwise exempt from FOIA’s obligation to disclose. It does something screwy instead and makes it appear that if federal agencies rely on a provision in a funding agreement to require invention use reports, they have to treat the use reports as confidential and therefore as exempt from FOIA even if the information in the reports isn’t exempt from FOIA. Whew. I feel like I have bureaucracies on my bureaucracies.
We will get to an outcome of all this that makes all this work in tracing through the details of the particular language moot–remember, Bayh-Dole is a do WTF you want kind of law. But there is a point to working through the details that has to do both with how Bayh-Dole operates, and the consequences of that operation with regard to information about whether the law is accomplishing its purposes. Given that Bayh-Dole is barely enforced, we might wonder how a law that is not enforced can accomplish its purposes. Save that thought for a bit.
We have yet to look at what happens to secrecy in Bayh-Dole’s implementing regulations and the standard patent rights clause authorized by Bayh-Dole. The same person who packed Bayh-Dole with clauses for “political expediency” to get the law passed in a lame duck Congress as a parting candy gift to Senator Bayh (this is how important the law was to the Senate, apparently) moved over to the Office of Federal Procurement Policy (now the task is assigned to the Department of Commerce, which has for some reason delegated the task to NIST) to write the implementing regulations. At the Office of Federal Procurement Policy, the regulations could be shaped in all sorts of odd ways, such as making the procedures for march-in so convoluted they could never possibly operate. Let’s see what happens to secrecy in the regulations that implement Bayh-Dole, which requires agencies to treat invention use reports as exempt from FOIA.
A federal agency cannot just decide in the moment that it has the authority to make any information “privileged” or “confidential.” If an agency did have that authority, then there would be no point to FOIA. An agency could just declare everything it receives confidential. Wait–no–that’s just what Bayh-Dole requires agencies to do in their contracting for research with universities. Continue reading
I see a question in my search feed: “Does a Bayh-Dole patent clause make a grant a contract?” Let’s sort this out.
Short answer. No, the presence of a patent rights clause does not change the nature of the agreement.
Bayh-Dole requires the use of a standard patent rights clause in every federal funding agreement. Here’s the definition of “funding agreement”:
any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government. 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.
So whether a funding agreement is a grant or a contract is determined by something other than the presence of a standard patent rights clause. Continue reading
[revised to make clear that 35 USC 202(c)(5) does not require federal agencies to contract to agree to keep invention use reports secret–the law stipulates that federal agencies will treat such information as a class of information–“commercial and financial” and “privileged and confidential”–the implementing regulations and standard patent rights clause, however, add a requirement that agencies must by contract agree not to disclose]
We have been looking at the Bayh-Dole Act’s secrecy provision regarding invention use reports. That provision was changed from “may” to “shall” in 1984, and we have argued that the change in wording requires us to look for a change in meaning. “May” exclude from disclosure any confidential information is not at all the same as “shall” exclude from disclosure all information regardless of whether it is confidential. I know, it’s all convoluted and federal agencies aren’t going to change their practices and no one is going to sue to get a court to explain how Bayh-Dole doesn’t do what the implementing regulations make it do. So what follows is just to document what’s going on. It’s not entirely wasted effort, however, because we learn something new about Bayh-Dole by working through its secrecy requirements.
Bayh-Dole’s secrecy provision at 35 USC 202(c)(5) depends on how it conforms with the federal Freedom of Information Act (FOIA). The provision in Bayh-Dole says that use report information is to be treated as information excluded from FOIA disclosure. Sounds simple enough. What could possibly go wrong? For that, let’s look at FOIA disclosure requirements. We will have to work through all this more carefully. Let’s get at it. Continue reading
Bayh-Dole does not disturb federal common law with regard to inventions. Inventors supported by federal research funds own their inventions. The Supreme Court made this clear in Stanford v Roche.
Bayh-Dole applies to subject inventions only. Subject inventions are patentable inventions made with federal funds and owned by a contractor. A contractor is any party to a federal funding agreement for research.
Unless a contractor owns an invention made with federal funds, Bayh-Dole does not apply. Under Bayh-Dole, an inventor has no obligation to assign inventions and so turn them into subject inventions or even to report inventions unless they are subject inventions.
There is nothing, moreover, in Bayh-Dole that requires inventors to assign inventions made with federal funds to the federal government, or requires inventors to promise to assign such inventions to the federal government.
Pause with me a moment. If an invention is not owned by a contractor, then the invention is not a subject invention and Bayh-Dole’s apparatus does not apply. Continue reading
[updated with additional discussion of the nature of the 1984 change relative to a similar construction in 35 USC 202(c)(4)]
Let’s examine the 1984 amendment to Bayh-Dole’s secrecy provision for invention use reports in more detail. It is worth pointing out that Section 202 of Bayh-Dole has been routinely amended and it would be worth at some point to show the general nature of the amendments–most of which appear to remove public protections and agency power to exercise oversight over the work of patent brokers gaining access to federally supported inventions.
The provision regarding non-disclosure of invention use information shows up in a list of clauses that must be included in any funding agreement for research:
(c) Each funding agreement with a small business firm or nonprofit organization shall contain appropriate provisions to effectuate the following: . . .
The actual wording is not specified–just that there must be “provisions to effectuate” what follows. (Please, avoid phrases such as “provisions to effectuate” with your families. These are not nice words.) It is important to see this fundamental move by Bayh-Dole. The law is directed at federal agencies, but instead of setting things out directly, Bayh-Dole specifies what a patent rights clause must do–but it leaves that doing to be drafted outside the law. If you want, it is a back door built into the facade of the law. The law can make whatever gestures it wants, but the actual impact of the law will come with how the standard patent rights clause is constructed, and that construction takes place without Congressional oversight or approval.
Bayh-Dole then includes at its core the freedom for the drafters of the implementing regulations (it turns out, funny, the same folks drafting Bayh-Dole itself) to mess around with the requirements after Congress has approved the basic idea. Given these folks could have included the language they really wanted right here in the statute (they were the same folks, after all), and didn’t, should tell us something. I wonder if this clever bit in Bayh-Dole also has been exported to all those other countries adopting a “Bayh-Dole” law. One might compare the Kennedy patent policy, where requirements for agency contracting for invention rights are set out with some definition, to be walked back when there’s a matter of public interest that takes precedent. Continue reading
We are working through how Bayh-Dole, a law that requires the patent system be used to promote the use of subject inventions with public benefits on reasonable terms, comes to be a law that gives the impression that required reports of such use must be held as federal secrets. That is, Bayh-Dole appears to require the federal government to withhold from public release any information on the status of subject inventions. It wasn’t this way in the original law. But it’s this way now.
Here is the big scheme of secrecy in Bayh-Dole as it applies to the use of subject inventions, across multiple layers of implementation:
35 USC 200 Use the patent system to promote use of subject inventions.
35 USC 201(f) Practical application requires established use with public benefits on reasonable terms.
35 USC 202(c)(5) Agencies don’t have to require reports of use, but if they do, reports they receive are to be treated as information exempt from federal public disclosure law.
This in a nutshell is the stated goal of Bayh-Dole–subject invention use, with public benefits on reasonable terms, reported to the federal government by the contractor, and kept secret by the federal government. Continue reading
A question popped up in my WordPress dashboard as a search query–“Is it ok to grant an exclusive royalty-free license under Bayh-Dole?” I thought I’d give an answer.
There’s a bit of a problem, though. Continue reading