Bayh-Dole is thin soup when it comes to federal innovation policy

Posted on April 18, 2019 by Gerald Barnett

NIST wants march-in for Bayh-Dole’s section 203(a)(2) and (3) to be for “national emergencies” only. Section (a)(2) concerns health or safety needs that are not “reasonably satisfied.” Section (a)(3) concerns regulatory requirements that are not “reasonably satisfied.”  But the *price* element is in 203(a)(1). Only (a)(1) relies on the definition of practical application–use with benefits available to the public on reasonable terms.

If an invention is not used or the benefits of use are unlikely to be made available to the public on reasonable terms, no practical application has been achieved. If there’s no practical application, then a federal agency has the right under the standard patent rights clause to march in and require licensing of the subject invention. Compulsory licensing is the remedy for a failure to offer the benefits of using an invention to the public on reasonable terms. At least there’s the appearances of an apparatus in Bayh-Dole to protect the public interest. In practice, it’s not that way. In practice, no federal agency has ever “marched-in.” In practice, federal policy is not to protect the public interest with regard to practical application.

An NIH attorney–Norman Latker–drafted Bayh-Dole to reestablish a patent monopoly pipeline from the NIH to pharma. Latker had previously restarted the Institutional Patent Agreement program and drafted the master IPA. The IPA had the same effect as Bayh-Dole–to place federally supported inventions behind  patent monopolies to be served out by nonprofits to the pharmaceutical industry. The IPA also had a public interest apparatus–but in practice that apparatus was ignored and nonprofits sought exclusive licenses for the biomedical inventions they claimed to own (and the IPA, unlike Bayh-Dole, provided a legal foundation for nonprofits to assert ownership of inventions made with NIH funding).

One argument for doing so is the monopoly meme. The claim of the monopoly meme is that without a patent monopoly, no one will use or develop a research invention. That’s nonsense, but there are people who love nonsense. Continue reading →

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More bad Bayh-Dole advice in the wild

Posted on April 15, 2019 by Gerald Barnett

Here are “three important questions answered” by a company specializing in Bayh-Dole compliance. (I’m sorry, Nikki. Have your people up their game.)

1) If you report an invention after the 60-day deadline, can the Government take title?

Yes, the Government can come in at any time and take title if compliance is not completed.

What does “compliance not completed” mean? Dunno. The disclosure deadline is “two months” not “60 days.” See 37 CFR 401.14(c)(1). In Bayh-Dole, the deadline is “within a reasonable time.” See 35 USC 202(c)(1). The government may “request” title if a subject invention is not reported within the two month window. Bayh-Dole does provide, however, for contractors to appeal federal agency requests for title, and federal agencies must have procedures in place for such appeals. See 37 CFR 401.11.

Most agencies require that you report invention disclosures within 60 days of receipt, or as soon as you become aware of federal funding thereafter.

This part of the answer is strange. The standard patent rights clause establishes the reporting requirement. If an agency is going to change that requirement, it has to go through the procedure to determine exceptional circumstances and introduce a changed patent rights clause for a given funding agreement. Until it can be established that an invention has been made in performance of work under a funding agreement, that invention is not a subject invention and there is no disclosure requirement. If an invention has in fact been made in the performance of work under a funding agreement, only when that fact has been established by contractor personnel responsible for patent matters does the two-month disclosure deadline become effective. Continue reading →

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Research Enterprise Policy Issues: fragmentation of noisy research

Posted on April 10, 2019 by Gerald Barnett

We have looked at noisy research and quiet research. Policy folks don’t much care, but it appears to make a difference whether research is conducted quietly or noisily. In quiet research, variations are explored, applications considered, data assembled, evidence checked before anything is announced. In noisy research, topics and areas are announced in advance, with proposals submitted as a kind of competitive boast in the hope of obtaining funding, with many other researchers turning their attention to whatever is announced as available for funding. The result of noisy research is that it attracts participants–if that is where the funding is, then that is where proposals are directed, awards are granted, and new IP created.

If we add in that the organizations that host research insist on claiming ownership of results and furthermore intend to hold ownership as an intellectual property monopoly in the hope of finding an exclusive business partner to “develop” the results into commercial products (and pay for the right to do so), then the necessary result is that the area of research fragments into the ownership positions of the organizations whose researchers have all been attracted to the noisy research.

The upshot is that when ten or fifty or two hundred researchers and their organizations each think this way about approximately the same area of inquiry, the work itself fragments into many pieces, each controlled exclusively and independently of the others–tens, to fifties, to hundreds of little IP portals. If each IP position is held for exclusive licensing, then it rapidly becomes impossible for anyone to acquire sufficient licenses to exploit the research results being created–whether to use those results (as in research or professional activity) or to make and sell products based on those results. Continue reading →

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Research Enterprise Policy Issues: noisy work, quiet work

Posted on April 9, 2019 by Gerald Barnett

Let’s discuss practice around research, invention, and enterprise.

Let’s start distinguish quiet work and noisy work. When someone is doing unprovoked research on their own–in the proverbial laboratory (institutional) or garage (unaffiliated, gadgeteer, entrepreneur), their work tends to be quiet. Similarly, company-based research is also often kept quiet–researchers might not be allowed to get all public about what they are working on. Quiet research generally doesn’t get much publicity and doesn’t seek it out until those involved decide the time is right–they have enough of a discovery or data or product to support a claim that it is worth announcing it. Indeed, for company-based research, securities law has things to say about “forward-looking” statements, so companies have legal reasons to be circumspect about making claims regarding what their research might produce. If it is research, after all, what is to be produced is necessarily uncertain.

University administrators, unconstrained by such niceties as being careful to prevent reliance on statements about uncertain things, are much less restrained about making forward-looking statements about the great potential of research at their institutions to heal the sick, right social wrongs, supply us with energy, and stimulate our economy. In short, university administrators thrive on noisy research.

Noisy research often gets announced even before it has been started, like an expedition of blabbermouths setting out to discover gold in the Sahara. University administrators announce discoveries and inventions with press releases that present to the public “potential” as if it were fact. Publicly funded research is by its nature noisy. The areas of importance for research are announced. Proposals for research when funded become public. Progress reports are required, and other than holding back patentable subject matter long enough to file patent applications and accounting for classified research, the progress reports are public, too.

Noisy work, then, is a primary attribute of publicly funded research. To seek out public funding is to choose to do noisy work. One proposes work in an area that is already announced and noisy. What one proposes to do is reviewed and announced. One does the work by announcing progress along the way. Inventions are to be announced–via the patent system, if nothing else. The more federal funding, the more research work becomes noisy. The more noisy the work, with more federal funding chasing it (and vice versa), the more people take an interest, the more people and organizations that get involved, and the more lots of pieces of the work get claimed by those involved. Noisy work with funding means lots of people all chasing related, similar, competing data, discoveries, applications. Continue reading →

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Typical Bayh-Dole wrongness in the wild

Posted on April 8, 2019 by Gerald Barnett

Here’s a 2017 article on Bayh-Dole, “Bullies and Beakers: How Large Universities are
Squashing Research Competition and the Contractual Remedies to Solve It,” by Jonathan Fort, then a law student, published in the Washington University Journal of Law & Policy. The burden of the article is a claim that big universities poach researchers from small universities and small universities can fight back by forcing their researchers to assign all inventions to them and to include a clause for “liquidated damages” if the researchers jump to another university. It’s law student silliness from premise to remedy, but that’s not what’s interesting about the article. In the middle of the discussion we find an account of the Bayh-Dole Act. There is nothing at all exceptional about the account of Bayh-Dole. It gets most everything wrong, as usual. And that’s what is interesting about it. The article makes what it presents as an utterly factual statement the bogus claims made about Bayh-Dole by the university invention management community.

Let’s work through some text from the article.

In 1980, Congress passed the Bayh-Dole Act (BDA) to incentivize researchers and private industry professionals to commercialize federally funded technologies.29

The part that Congress passed Bayh-Dole in 1980 is true. The rest is nonsense. Bayh-Dole sets forth the intent of Congress at 35 USC 200. There is nothing about “incentivizing” anyone, and certainly not either “researchers” or “private industry professionals”–whoever those might be. Put it this way–why would researchers have any greater incentive because university administrators were motivated to take researchers inventions from them? And why would federal policy on research inventions suddenly decide that non-descript “private industry professionals” should be the object of attention? Of all people, why them? Continue reading →

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9 things Bayh-Dole does not require universities to do, part 3

Posted on April 5, 2019 by Gerald Barnett

We have worked through nine things Bayh-Dole does not require. Let’s come back around a work through the disclosure requirement that Bayh-Dole does not require in detail.

Bayh-Dole has a disclosure requirement that is to be placed in the default patent rights clause included in each funding agreement (35 USC 202(c)(1)). That disclosure requirement, however, is narrow and conditional. First, only subject inventions are to be disclosed–ones owned by a contractor, that is, a party to the funding agreement. Second, the university is required to disclose a subject invention to the federal government only when personnel designated by the university for patent matters have received a compliant disclosure of the invention from the inventor. Thus, if those patent personnel do not receive a disclosure, then the university has no obligation to disclose. Of course, if a university does not disclose, then it cannot choose to keep ownership, but on the other hand, the federal agency has no knowledge that the invention exists so it cannot request title. And even if a federal agency did know about a subject invention, if the university’s designated patent personnel have not received a compliant disclosure, the university has not breached its disclosure obligation and the federal government cannot request ownership. It’s stupid. But that’s the law. Face it, Bayh-Dole is all-around stupid.

Why are things this way? One reason: Bayh-Dole originally required universities to actively monitor research for inventions. The disclosure obligation arose when an invention claimed by the university was made in work receiving federal support. If the university owned the invention, then it had to be disclosed to the federal government. That made university-designated patent personnel responsible for identifying inventions claimed by the university and disclosing those inventions to the federal government. In that version of the law, the university had a disclosure obligation, but its inventors did not. It was up to the university to secure from its inventors a disclosure of any inventions made under contract that the university claimed to own (or had acquired ownership of, or had an equitable ownership interest in).

Put it this way–if under Bayh-Dole a university has no legal right to compel disclosure of a given invention from its inventor, then how does the university have any legal right to claim to own that invention? Clearly, in such a situation, something is way off. What, even, is the invention that is owned or to be disclosed?–without some defining description of the invention, it has no boundaries, it is a cloud, a vapor, a dispute unpinned from the map of opportunity. Continue reading →

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9 things Bayh-Dole does not require universities to do, part 2

Posted on April 4, 2019 by Gerald Barnett

We are working through a list of nine things Bayh-Dole does not require universities to do. It’s worth the review because there are all sorts of claims out there–almost never contested–about what Bayh-Dole requires. Most of it is nonsense. And that nonsense means that the university invention management community is mostly incapable of dealing responsibly with Bayh-Dole. But we should not be too hard on the university administrators–federal agency officials are no better at dealing with Bayh-Dole. Not only do they misrepresent the law–even NIST’s chief counsel gets the law screwed up–but also agencies ignore the law in their contracting and decline to enforce the patent rights clause. That’s enough to question why Bayh-Dole should continue to exist.

7. Bayh-Dole does not require a university to have a patent policy.

The NIH’s IPA program required universities to have patent policies. A review of the patent policy was one of the preconditions for approval to participate in the IPA program. Bayh-Dole, however, does not require a university have any patent policy. Instead, Bayh-Dole simply states that if a university acquires ownership of an invention made under federal contract, it can choose to keep that invention. No policy needed. The rest of the conditions placed on the patent property rights in that invention are a matter of the standard patent rights clause–a matter of federal contract. The university agrees to those conditions. Again, there’s no need for the university to have a policy that it will agree to those conditions. The university agrees when it accepts the federal funding.

But what about inventors? Nothing in Bayh-Dole reaches to inventors as inventors. That’s the fundamental point of the Supreme Court’s decision in Stanford v Roche:

The Act’s disposition of rights—like much of the rest of the Bayh-Dole Act—serves to clarify the order of priority of rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor. Nothing more.

Bayh-Dole is about priority of rights between contractors and federal agencies–not about priority of rights between contractors and inventors. That’s a huge difference–one usually lost on university administrators and even on federal agency officials, such as the ones at NIST. Continue reading →

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9 things Bayh-Dole does not require universities to do, part 1

Posted on April 3, 2019 by Gerald Barnett

Let’s review some of the things Bayh-Dole does not require universities to do. These, despite what you may have heard. First the list, then the discussion, then an extended technical note for the folks that want detail and think perhaps there ought to be something rational about Bayh-Dole.

Bayh-Dole does not require

  • a university to do a single thing
  • a university to own any inventions made with federal support
  • a university to disclose any invention the university does not own
  • inventors to disclose their inventions
  • commercialization
  • a university to designate personnel responsible for patent matters
  • a university to have a patent policy
  • a university to have a technology transfer office
  • a university to license subject inventions for money

Let’s work through the list. Advocates of Bayh-Dole should love this stuff!

1. Bayh-Dole does not require a university to do a single thing.

Nothing, nothing, nothing at all. Only one provision of Bayh-Dole even applies to universities, and it is a conditional. Here it is (35 USC 202(a)):

Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to any subject invention

That’s it. That’s the total of what Bayh-Dole has to say about universities, at least those that are nonprofits. A subject invention is an invention that the university has acquired and which was made in the performance of work under a federal funding agreement (and is or may be patentable, and was conceived or first actually reduced to practice under the funding agreement). If a university has gone to the trouble on its own to acquire such an invention, then it can choose to keep owning that invention, subject to the requirement that the university has disclosed the invention to the federal government. But a university doesn’t have to lift a finger to go out to acquire any invention made with federal support. It can ignore such inventions altogether–and so can its research personnel–if it so chooses, and then Bayh-Dole requires nothing of the university.

Continue reading →

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Bayh-Dole’s patent law policy on patent property rights, 2

Posted on April 2, 2019 by Gerald Barnett

We are working through Bayh-Dole’s statement of policy at 35 USC 200 on the premise that this statement of policy, a part of patent law, has a material effect on the patent property rights of all inventions within the scope of this policy. Since federal statutes and procurement regulations with regard to federal interest in inventions made with federal support are hugely broad, Bayh-Dole also must be just as hugely broad if it is to preempt every last bit of them.

Bayh-Dole does not repeal the federal invention procurement parts of statutes; rather,  Bayh-Dole preempts those parts when its conditions go true–when an invention arises in federally supported research or development and more particularly when a contractor acquires title to an invention conceived or first actually reduced to practice in performance of work that is at least in part under a federal funding agreement (including any assignments, substitution of parties, or subcontract of any type that extend the funding agreement). So, 35 USC 200 necessarily is both broad and material.

We continue with 35 USC 200’s policy. “It is the policy and objective of Congress . . . ”

to promote collaboration between commercial concerns and nonprofit organizations, including universities;

Again, collaboration is scoped broadly. Collaboration is not restricted to subcontracts on federal funding agreements shared between nonprofits and commercial concerns. Nor to licenses. Nor even to “commercialization” of inventions into products. The requirement of 35 USC 200 policy is the promotion of collaboration. For each action that a patent holder may take under 35 USC 200, the burden is to demonstrate that this action promotes collaboration in addition to promoting utilization and maximum participation by small commercial concerns. One does not comply with one part of 35 USC 200 and get the rest of the policy waived as no longer relevant. No–each additional statement adds to the requirements on holders of patents on 35 USC 200 inventions. Continue reading →

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Bayh-Dole’s patent law policy on patent property rights, 1

Posted on April 1, 2019 by Gerald Barnett

Bayh-Dole, part of federal patent law, starts with a statement of “Policy and Objective” at 35 USC 200. Usually, commentators treat this bit as “preamble” or “a restatement of legislative intent” or, bluntly, inoperative fluff. The commentators are wrong. 35 USC 200 places conditions on patent property rights in the class of inventions arising from federally supported research or development. That class of inventions includes (1) all inventions within the scope of Executive Order 10096–inventions made by federal employees with federal support and claimed by the federal government; (2) all inventions not subject to the Bayh-Dole Act but made with federal support and in which the federal government has the right to acquire ownership by statute or by federal contract; and (3) all subject inventions–ones owned by a party to a federal funding agreement and made under contract. For this class of inventions, 35 USC 200 has a material effect.

35 USC 200 states not just objectives but also policy. Policy has a regulatory meaning. That policy replaces the Nixon executive branch patent policy, which in turn formed the basis for federal management of inventions obtained by specialty statutes, Executive Order 10096, or which were managed under procurement regulations.

35 USC 200 is general. It applies to

inventions arising from federally supported research or development

That’s broader than the definition of “subject invention” that’s specific to inventions made under federal contract. 35 USC 200 applies as well to inventions owned by the federal government and made by federal employees. If an invention “arises from federally supported research or development”–not in, not under, not pursuant to, but arising from–then the policy at 35 USC 200 applies. Any invention in any chain from discovery to the point of practical application–the end point of development–comes within the scope of 35 USC 200, if there’s federal support in whole or in part for the research or development. The federal support does not have to be directed at any given invention. The federal support does not have to expressly spent on any given invention. It is sufficient that the research work or development work receives federal support. The federal funding may support only a part of the overall work. Any invention arising within the scope of that overall work, even if only some part of that overall work has received federal funding, is also within scope of 35 USC 200. Continue reading →

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