Whistling all the way to the bank

If  Bayh-Dole is a vesting statute, then it appears to be unconstitutional under the 5th Amendment. At the time of compulsory acquisition of title to inventions for public use, there’s no  just compensation. But hooray I think Bayh-Dole is constitutional, and that the vesting statute argument is very wrong. It will be exciting to see.

Even if things are relatively hunky dory with Bayh-Dole, there still is an open question about just compensation, depending on how public universities in particular have implemented their practice under Bayh-Dole’s standard patent rights clause. It could be at this point that AUTM cannot get out of this any way they turn.

Illustration: I can buy your car from you, or you can offer to give me the car if I agree to take care of it, or I can forcibly take it from your driveway and say it is essentially the same transaction as the others, except I’m deferring any commitments on payment until I get around to it, which I might not, but as long as I’m willing to consider the thought of paying you for your car, that should be good enough. Perhaps you see by this thought experiment how much it matters that universities are not sloppy in how they handle title to subject inventions.

Nothing in the standard patent rights clause makes title retention by the university *compulsory*. The university does not have to accept the research funding (it is not imposed, but requested). The university does not have to elect to retain title (it can allow the agency to deal with the inventors on title). The university does not have to accept title even if it elects to retain title (as it can delegate its Bayh-Dole obligations to others). The university does not even have to *make the decision to elect to retain title* (as it can leave that decision with the inventors (and investigators)).

This last point typically encounters sloppy thinking, so I will spend some time with it. The university does get the *right* under the standard patent rights clause to elect to retain title. But nothing in the clause specifies how that decision is made. It *can* be made unilaterally by the university. But the basis for doing so is not the standard patent rights clause. It is a university decision to make title transfer compulsory. The university is entirely responsible for its actions.

A non-compulsory alternative is rather obvious. An investigator invents. The university has done its job under (f)(2) and the inventor has agreed in writing to protect the government’s interest. The university has a policy that permits the inventor to decide how to comply with (f)(2). The inventor may direct the university to waive title, in which case the inventor is choosing to deal directly with the agency, recognizing that the agency has the right to require assignment of title. That was always the bargain anyway, so no big deal. The inventor also could request that the university elect to retain title. Furthermore, the inventor could make that request conditional on various things that might matter to the inventor. Perhaps the inventor requests that the university elect to retain title and assign its Bayh-Dole obligations to the Myelin Repair Foundation. If the university agrees, then once the university has elected to retain title and passed obligations over to MRF, the inventor assigns happily to MRF, entirely non-compulsed. Perhaps instead the inventor asks the university to take title.  Maybe the university does not want to do this. Maybe it does not have the resources to file a patent application. So it refuses the request. Now the inventor has no choice but to deal with the agency. In any case, such a policy would not be compulsory in its management of title.

Again, the university can develop a policy that does business with the owner of the car, or it can invoke a right to take the car as it wishes. But there are consequences. If it takes the car because it invokes federal authority, it is required to provide just compensation. If it accepts an offer to receive the car because that is what the car’s owner wishes, then the deal is whatever folks can work out. But there cannot be any compulsion in the deal.

The AUTM position on all this, however, is sloppy. A lot of technology transfer folks lining up with them endorse this kind of thinking. So long as the university ends up with title, it’s all good, so why worry a little brute force for the sake of efficiency, compliance, and all that. We can get into the nature of diplomacy later. For now, the point is that the compulsory taking of title by universities under the standard patent rights clause is *entirely their own doing* and how they do it has consequences with what they owe the people whose personal property they have lifted. They owe just compensation because of how they choose to do the title transaction.

The only thing that is required by the standard patent rights clause is the deal between the employee-inventors under (f)(2) and the government, that they will protect the government’s interest in exchange for the federal support they have requested for their work. That deal is to deliver invention rights if the agency requests them. The standard patent rights clause allows the university, broadly, to intervene in this deal and redirect it. It *can* be the inventor’s decision. Nothing in the standard patent rights clause precludes that. It is an administration’s decision to make title claims compulsory. And there are consequences for administrations as a result.

Now, all we need is a law firm that understands the law of large numbers and the meaning of a class action lawsuit for just compensation for every university inventor of a subject invention who was required by a public university to assign his or her title to inventions under the authority of the standard patent rights clause and never received just compensation for doing so. That would be a few billion dollars of uncompensated compulsion.  Ought to be interesting enough to attract someone’s  attention, eventually.

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One Response to Whistling all the way to the bank

  1. Pingback: Whistling all the way to the bank, revisited 1 | Research Enterprise

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