Minimum Policy, Phase 2

[This is a pre-Stanford v Roche discussion. I have updated it for current CFR references. A contractor does not “elect title”–a contractor may “elect to retain title” that the contractor has obtained by conventional means. A contractor’s option under a patent rights clause to elect to retain ownership relative to a request from a federal agency for title is distinct from the means by which an inventor disposes of title through a negotiated assignment or patent agreement.

The discussion lacks an account of the standard patent rights clause (f)(2) written agreement requirement. A prime contractor must require certain employees to make a written agreement to, among other things, establish the government’s rights in subject inventions. A subject invention is a patentable invention made in the performance of work under a federal funding agreement and which is owned by a party to that agreement.

Contractor is defined as any party to funding agreement. An initial or prime contractor may create additional contractors by assignment, substitution of parties, and subcontract. The (f)(2) requirement requires prime contractors to make their technical employees parties to each funding agreement for specific, invention-related actions they perform in their personal capacity. The prime contractor then makes its employees become contractors, and when those employees invent under a funding agreement and own their inventions as a matter of federal patent law, then their inventions are also subject inventions. The patent rights clause that controls these subject inventions initially, however, is 37 CFR 401.9, the inventor patent rights clause, not 37 CFR 401.14, the standard patent rights clause.

Bayh-Dole is part of federal patent law. In federal patent law, invention ownership passes through inventors. Bayh-Dole does not change this. The Supreme Court was clear that Bayh-Dole provides no special privilege by which a prime contractor can take subject inventions owned by the inventor-contractors. See the standard patent rights clause paragraph (g) for the analogous situation in subcontracting.]

The first goal of an IP policy implementing Bayh-Dole is to meet the minimum obligations.  Note, one does not even have to elect to retain title–37 CFR 401.14(d) takes care of that in the case of default by the contractor. But let’s say that in phase 2 of an IP policy build-out, one wants to create the apparatus for notice of election to retain title. This would seem reasonably simple–but there’s more to it than that.

Fundamental to the IP policy is a decision step about who is designated to be responsible for patent matters, who will determine that an invention is a subject invention; who will decide whether the university has a right outside the funding agreement to require assignment or if not a right then whether the university will offer to take assignment; who will make the decision to elect to retain title once the university has acquired title; and who will hold that title (and be responsible for meeting the requirements that come with holding title).

You might answer, “Why, the university will do all these things!”  Whoa. But it could be a research foundation. Or it could be any organization that has invention management as one of its primary functions.  Having the university own everything could be seen as a simplifying step with focus, or it could be seen as a restrictive step lacking responsiveness and vision with regard to achieving practical application of the subject invention and advancing research.

It is important to see that the right to elect to retain title is portable under Bayh-Dole. This may happen various ways: 37 CFR 401.14(k)(1) [nonprofits can assign rights, subject to restrictions and a requirement that the assignee is subject to the same patent rights clause as the nonprofit] and paragraph (g) [must flow down Bayh-Dole rights in subcontracts], as well as through the operation of 401.9 [rights are held by inventors having made the written agreement]. That is, a university prime contractor hosting faculty-proposed federally funded research may assign its right to elect to retain title; or, having elected to retain title, may assign the right to obtain title (through conventional means); and, having obtained title, may assign that title, or may choose not to retain title so that the agency may decide whether to request title.

So this second phase of building a university IP policy for Bayh-Dole involves allocating the decision making authority for

(a) designating those responsible for patent matters;

(b) implementing the (f)(2) written agreement;

(c) determining whether a given invention is a subject invention;

(d) determining whether the university has a conventional right to require assignment (such as a patent agreement) or if not whether the university should offer to manage the invention; and if the university obtains title,

(e) who should decide whether or not to elect to retain title (and on what basis); and

(f) who should decide where that title (and associated Bayh-Dole patent rights clause obligations) should be conveyed for management.

Possible candidates are: inventors, principal investigators, technology transfer director, patent counsel, dean, vice provost/chancellor of research or economic development or finance, committee of faculty, administrators, and/or external advisers.

I have suggested that the principal investigator would be a great choice as the personnel responsible for patent matters for a minimum policy. Bayh-Dole is implemented by patent rights clauses from funding agreement by funding agreement, so also from PI by PI. The key variation that would be introduced would be the purposes and expertise of PIs. Different investigators may have different objectives and methods–and they should, and universities and invention policies should acknowledge and value the diversity of perspectives. That’s a distinguishing characteristic of university-hosted research–precisely that it is not within a government or corporate directed agenda.

Inventors, who may also be PIs, or who would be working with their PIs, agreement by agreement, would have the choice then of publishing without using the patent system, or of allowing the government to request title, or negotiating a workable arrangement with the university or another invention management organization regarding what happens if the university acquires the inventors’ title. Or, of course, the inventors could start a company and place the invention with the company–without having to go through the university’s bureaucracy and standard patent rights clause restrictions. If a PI doesn’t want to serve in this role, the PI could designate someone to do this from a list–a dean, a chair, a tech transfer officer.

There are of course other ways to do it. But involving the PI is a sweet spot for a minimum policy.  And choice is a sweetener in innovation management. Choice tastes way better than compulsion, duty, and bureaucratic compliance.

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