How does ownership vest under Bayh-Dole?
There appear to be five arguable ways that patent title vests under Bayh-Dole. I give them here with the best argument I have identified for each. By way of disclosure, if previous posts haven’t made it clear, my sense is that 1) is broadly used, that universities routinely obtain written assignments from inventors of federally supported inventions, and believe that these assignments transfer personal rights to the university. But federal law never ceases to amaze, surprise, and delight. [See below for an update and comment on the Stanford v Roche decision.]
I wonder if this is one of those situations in which there is no “ideal form” of the law as intended, that folks just didn’t recognize the differentiation in practice, or if they did, they didn’t adequately mark it in their drafting, or if they did, those writing the implementing regulations did not take those markings up. We would then have one of those nifty situations in the history of important cultural writing in which the final form of the decision about what the text means is with us in the here and now as we make it stick, by way of events and argument and appeal to authority of whatever sort, not by way of reason sifting through past evidence for something solid, finding the true meaning, the primitive narrative, or a clearly demarcated original intent of such precision that all other arguments fade away.
1) Normal personal rights committed under written agreement. Ownership vests as a personal right of inventors, but with written agreements between investigators and employers protecting the government’s interest by contract. Depending on the choice of the employer-contractor, inventors promise to assign ownership as directed by either their employer (if the employer-contractor elects title) or the agency (otherwise).
Bayh-Dole requires contractor-employers to have written agreements with research personnel to protect the government interest in subject inventions. If ownership vested with the employer-contractor upon notice of election of title, there would be no need for written agreements with research personnel, as the contractor could be so obligated to protect the government interest directly. Nothing in Bayh-Dole indicates an intent to change the ordinary treatment of patent rights as personal property vesting with the inventor until otherwise transferred by a writing. Placement of Bayh-Dole in the patent laws at 35 USC does not in itself indicate a change in policy. Rather, silence indicates the intent that patent law is otherwise undisturbed by the addition of Bayh-Dole. Widespread practice is to obtain written assignments from inventors. This would be unnecessary if ordinary treatment of vesting was changed under Bayh-Dole. Surely in 30 years, the PTO would have informed universities of this after receiving superfluous assignment documents and the practice would have been suspended. Similarly, in the regulatory implementation at 37 CFR 401, one would expect assignment practice changes to be called out to give guidance for changed procedures expected under Bayh-Dole.
2) Law restricted personal rights. Ownership vests as a personal right of inventors, but under Bayh-Dole, it is illegal for inventors to do anything but follow the directive of their employer or the government with regard to assignment of rights. Failure to assign when directed to do so, or assignment not directed by their employer or the agency, is illegal and void, and any promise to so assign unenforceable. Alternative: ownership vests as a personal right of inventors, but Bayh-Dole (or state law, or written university policy requiring assignment or compliance with the terms of extramural research awards) constitutes a writing meeting the requirements of the PTO for transfer of patent rights.
Written agreements are required as a compliance step but are not the only way in which ownership rights may vest. Whether or not a written agreement exists, the law requires assignment upon authorized request by either the contractor-employer or the agency. Inventors hold personal rights, but with the requirements of federal law taking precedence over all other arrangements. Written agreements serve to put research personnel on notice of their obligations. Assignment is made in the normal way, but there is no way to resist it, since the obligation carries the force of federal law. Only if the employer-contractor does not elect to retain title and subsequently the agency chooses not to hold title does title vest with the inventors, and only then with the minimum conditions of 37 CFR 401.9. The requirement for written agreements functions as positive notice, along with training in timely disclosure, to ensure that inventors disclose and understand their obligation to assign as directed. It is these actions that protect the government’s interest, not the obtaining of title to patent rights by assignment, since failing to disclose or attempting to assign contrary to the law would frustrate the government’s interest in subject inventions.
3) Vesting of ownership takes place upon notice or default. Ownership does not vest until the employer-contractor notifies the agency of its decision whether to elect to retain title or defaults on such notice. If the employer-contractor “elects title,” then title vests with the employer-contractor, and no assignment from the inventors is required. Assignment documents may be prepared to confirm that inventors have no claim, and to provide supporting documentation, but title is not actually passed through such records because title vests with the employer-contractor upon notice to the agency.
Bayh-Dole creates a federal preemption to ordinary treatment of ownership of patent rights. In the case of Bayh-Dole, patent rights still have the attributes of personal property, but that property is claimed by the law on behalf of the contractor-employer or the federal agency. Only the federal agency may release rights to the contractor’s inventors, under 37 CFR 401.9. There is no need for assignments to be made by inventors, though there is no harm in preparing them to remove any doubt and provide a documentary record. A similar kind of confirming documentation arises in copyright, with work for hire, to prevent any faults due to technicalities or later motivation to claim differently. Bayh-Dole prevents title from vesting with inventors until all other formalities have been satisfied. One such formality is the employer-contractor giving notice of its election to retain title. Upon such notice, title vests in the employer-contractor. That is the end of the matter. Written agreements protect the government interest by providing positive notice and reaffirming the importance of timely disclosure and cooperation with federal policy as well as compliance with federal law.
4) Ownership provisionally vests with the agency, subject to a conditional action of the contractor-employer. If the contractor-employer fails to elect title, then the agency holds title without the need for further formalities. Assignment documents may be prepared to confirm the inventors have no claim, but title is not actually passed through such records because title vests with the agency unless the contractor-employer intervenes. Agency may direct the PTO to issue patents to the agency, contractor, or inventors, as it chooses, subject to the processes set out in Bayh-Dole.
Ownership is with the agency because the government issues the patent right and may decide who benefits under Bayh-Dole regardless of personal ownership rights that may pertain to inventions. The government has a clearly established interest under Bayh-Dole in all subject inventions, and an agency therefore has standing not only to file applications for inventors but to determine to whom resulting patents will issue. While inventors may file patent applications claiming personal rights, if their claim is in violation of Bayh-Dole, an agency may direct the PTO to disregard the claim and issue the patent to the agency or the contractor, depending on the contractor’s election of title. No assignment document is necessary to establish transfer of title, because the inventors’ claim on title is invalid.
5) State and policy writings to transfer title. Normal personal patent rights committed under written agreement, but the written agreement incorporates state law requiring assignment of patent rights for all inventions made with the use of state resources. Such a writing acts as a present assignment to future inventions, not merely a promise to assign, since it is a requirement of state law. Alternatively, the writing requirement to make assignment is a function of the IP policy of a public university, which has the effect of law, and therefore satisfies the 35 USC 261 writing requirement, and self executes upon the making of an invention that satisfies the conditions of the IP policy. Alternatively, it is not the IP policy but the research contracting policy that requires all university personnel to comply with the conditions of extramural awards. Alternatively, any university can rely on such policies to meet the requirements for a transfer of title in writing under 35 USC 261.
If an action is required by law, then it cannot be consideration for a contract. Thus, written agreements under Bayh-Dole are, to the extent they are instruments enforceable under state law, are preempted by state law requirements. The role of written agreements is to protect the government interest, not the employer’s; therefore, the subject matter of Bayh-Dole mandated written agreements is to provide assurances by inventors that they are aware of and will comply with federal law. State law and university IP or research policy or employment agreements operate therefore for a scope and purpose different from that of the written agreements mandated by Bayh-Dole, though there may be overlap. When a state or state university implements law or policy that requires title to vest in the university, then that writing operates without further formalities by the inventor to make the assignment. Since the assignment is a matter of law, it cannot be bargained for by the inventor, nor is the inventor needed, as the university may assert its interest in the title directly with the PTO, reciting the law and its policy. For private universities, state law on ownership based on use of state resources does not apply, so written agreements here may fulfill, complement, or substitute for standing IP or research policy or other employment obligations, subject to state law on the disposition of patent rights in an employment relationship, as may be modified by federal law as set forth in Bayh-Dole or other federal regulations such as the Federal Acquisition Regulations.
Here is the thing. Let’s say the interpretation of the law is multiplicitous pending someone prevailing before an authority (a court, a legislative body, a regulatory body) to reduce many to one; what reading(s) give the most benefit to the using patent rights to promote the utilization of federally supported inventions?
Would we want title to vest outright in universities upon notice? Or with inventors until notice formalities are performed? If the future is ours, would we seek it in forensics of arguing over bits of evidence, or would we assert expectations for what we think would best meet the objectives of the law? For that matter, would a single interpretation be required?
[Update. Stanford v Roche was decided by the Supreme Court in 2011.
The Supreme Court made clear that employment is not sufficient to vest ownership of an invention with an employer:
In accordance with these principles, we have recognized that unless there is an agreement to the contrary, an employer does not have rights in an invention “which is the original conception of the employee alone.”
For university administrators, we may as well make it really clear. Getting faculty to agree that the university owns their inventions because the university employs them or because they use university resources is an agreement based on a false assertion. The university must get an agreement based on something other than false assertion–that the faculty member is hired to invent, or that all university resources are supplied only the condition that the university will own any invention. Something like that, if indeed true.
The Supreme Court decision follows, roughly, the first “way home” outlined above. Inventors own their inventions, and universities can get those inventions by entering into agreements to acquire those inventions. If universities do this, then they may come to own inventions made with federal support, and those inventions become “subject inventions,” and Bayh-Dole then applies. Bayh-Dole does not disrupt patent law on this matter:
It would be noteworthy enough for Congress to supplant
one of the fundamental precepts of patent law and deprive
inventors of rights in their own inventions. To do so under
such unusual terms would be truly surprising. We are
confident that if Congress had intended such a sea change
in intellectual property rights it would have said so
clearly—not obliquely through an ambiguous definition of
“subject invention” and an idiosyncratic use of the word
The problem for university administrators after Stanford v Roche is not so much how to pound down as legally binding a claim to ownership of faculty inventions, but rather coming to understand why it is that the U.S. patent system is set up to reserve rights for inventors when they request that reservation, and not set up to push those rights to institutions and companies. Bayh-Dole does not say “universities should own inventions made with federal support and should deal in patent monopolies.” Bayh-Dole says something more along the lines of “if an inventor chooses to assign an invention to a university for management on whatever terms the inventor and university may agree, a federal agency cannot second-guess that decision unless the university screws up its management of the invention.” Put that way, Bayh-Dole is genius. It’s just that many university administrators are not prepared to deal with such genius, and so revert to the idea that somehow Bayh-Dole is about making them special, or encouraging them to treat themselves as special for the benefit of the university, and so to demand ownership of faculty inventions.]