Life in the fast lane surely make you lose your infringement case

Here is a simple question: Can a university sue for infringement of a patent on a subject invention? Clearly, one answer is “of course”–universities do so all the time, often playing the troll or the jilted lover. Let’s put the question another way: Does a university have an unconstrained right to sue for infringement of a patent on a subject invention? This answer is “absolutely not.” Let me explain.

Keep in mind the fundamentals of federal funding. Federal agencies award grants to universities to support the work of faculty-proposed and -led projects. These federal funding agreements follow the form set out in 2 CFR 215. A university agrees to the terms and conditions of each grant as a condition of receiving the grant. The money in the grant award goes to cover the direct costs of the proposed research budget as well as the indirect costs (called “Facilities and Administration”) incurred by the university itself. Each grant is made to the university on behalf of the work of the faculty investigators. A university hosts this work, but does not support it–the university is, according to a negotiated F&A agreement with the federal government, fully reimbursed for its involvement in the federal grant.

A university formally releases its faculty members from “official duties” to work on such grants. The faculty members are almost never “employees” of the university to start with–and for federal grant work they are even less so. Add in the required (f)(2) written agreement in the standard patent rights clause, and faculty (and others) involved in federal grant work at a university are parties to the agreement–in essences private contractors for federal grant purposes affiliated with their university.


  1. Federal grants to a university are covered by a federal funding agreement.
  2. Faculty working on grants generally are not employed by the university for IP purposes.
  3. The (f)(2) agreement supersedes conflicting university IP and research policy claims.

Now, let’s look at the answer to the question regarding a right to sue for infringement. As with any arrangement, let’s start with the contract. A university may obtain ownership of an invention (and thus, a right to obtain a patent) under the terms of the federal funding agreement at 2 CFR 215. The section that controls patents is .36, labeled “Intangible Property”. Paragraph (a) of .36 deals with copyrights. Paragraphs (c) and (d) of .36 deal with rights to data. The paragraph we want is (b):

(b) Recipients are subject to applicable regulations governing patents and inventions, including government-wide regulations issued by the Department of Commerce at 37 CFR part 401, ‘‘Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements.’’

Paragraph (b) does not cite only the one standard patent rights clause (37 CFR 401.14(a))–rather it incorporates the whole of part 401. Further, paragraph (b) does not restrict itself just to 37 CFR part 401. Its scope is any “applicable regulations governing patents and inventions.” This scope matters. Are you with me so far?

I will lay out the limitations on suing for infringement first, and then work through them. This is not your usual legal analysis, of course–because, amazingly enough, as far as I know there just aren’t any. Most working attorneys I know won’t offer an opinion without a client, and most law firms would rather work for a university filing scads of patents than sue a university to prevent the unauthorized enforcement of just one patent. Academic attorneys–law professors–haven’t yet got to the basic idea that 37 CFR Part 401, not the Bayh-Dole Act, controls university behaviors. (Hint: it’s the contract, dudes, not the statute that authorizes federal agencies to put patent requirements in the contract.)

Here are six arguments that disrupt a university’s unconstrained right to sue for infringement of a patent on a subject invention:

  1. If a university fails to comply with the funding agreement’s requirements for IP, it fails to have a right to ownership.
  2. If a university claims ownership as a requirement of employment, it fails to have a right to ownership.
  3. If a public university claims ownership as a requirement of employment, it is an eminent domain taking and must have due process and reasonable compensation.
  4. If a university grants an exclusive license to substantially all of the rights of a patent, without obtaining federal agency approval for an assignment of rights.
  5. If others are using a subject invention, then the primary objective of Bayh-Dole is met and the right to sue those users is exhausted.
  6. If those using the invention are beneficiaries of the grant, and the university has acquired the invention using federal funds, there is no right to sue, per 2 CFR 215.37.

Let’s work through each these. If you see a better line of argument, let me know. Consider these a prospective map to fighting off a university lawsuit for infringement of a patent on a subject invention. More so, consider these a discussion of how university administrators give lip service to compliance with federal law but routinely thumb their noses at federal requirements when it suits them.

1. Failure to comply. A university may obtain ownership of a subject invention under the terms and conditions of the federal funding agreement that governs the funded project. Those terms and conditions are set out in the patent rights clause included in the funding agreement. Absent any tailoring of the clause, the standard patent rights clause at 37 CFR 401.14(a) applies, as authorized by 2 CFR 215.36(b). But if a university fails to comply with the patent rights clause, then it has no rights under the federal funding agreement to obtain ownership of any subject invention made under that funding agreement.

The regulation at 37 CFR 401.10 covering the assignment of subject inventions by government co-inventing employees makes clear the interdependence of assignment and compliance: “the assignment will be made subject to the same conditions as apply to the contractor under the patent rights clause of its funding agreement.”

The university’s ownership of any such subject invention should be challengeable. It is not enough for the university to show an assignment of the subject invention by the inventors–the university also must show compliance with the patent rights clause if the assignment is predicated on the claim that the invention is a subject invention as defined by the patent rights clause.

A university may fail to comply with the patent rights clause in any number of ways–for instance, failing to report the invention, failing to timely report the invention, failing to give notice to elect to retain title, failing to timely give notice to elect to retain title, failing to file a patent application within the specified time, granting an exclusive license to a large company when a comparably or better qualified small business desires a license. Many of these shortcomings, however, are dealt with by the remedies provisions in the standard patent rights clause, 37 CFR 401.14(a)(d) “Conditions When the Government May Obtain Title.” If the university (“Contractor”) screws up in disclosing or electing to retain title or file a patent application timely, then the government can require the university “convey” title to the government. If the government learns of the screw up, then it has only 60 days to request assignment.

Although the government might lose its opportunity to take ownership of a subject invention, it does not mean that the relationship between the university and its inventor is then settled, as if the patent rights clause never existed. The patent rights clause covers how the government might obtain title, but it also covers how a university must behave should it obtain title. The government interest is not merely in ownership, but in accomplishing the purposes of the Bayh-Dole Act–namely, and most importantly, to use the patent system to promote the utilization of inventions made with federal support (35 USC 200).

With regard to the relationship between the university and its potential inventors working with federal support, I don’t know of a single university that complies with 37 CFR 401.14(a)(f)(2). That is, the universities uniformly refuse to pass through (delegate, authorize, exempt) the conditional written agreement that potential inventors are to make personally to protect the government’s interest. Without the (f)(2) agreement, the patent rights clause is breached, and the standing of any assignment made in reliance of that clause is challengeable. The lack of a clear title is sufficient to disrupt a suit for infringement, as Stanford discovered in its litigation against Roche.

2. Ownership by employment. Patent law has no work for hire clause. The US Supreme Court was clear on the matter in Stanford v. Roche. Employment is not sufficient to provide an employer with a claim to ownership of an employee’s invention. A patent agreement is required. For universities, there is a further step–the patent agreement, if it is tied to the scope of *employment*, does not cover all scholarly activities a faculty member might engage in, but only those activities that are within the employer’s control–if a faculty member is hired to invent some specific thing, say, or activities subject to the assignment, control, review, and approval of the university (which excludes most scholarship and research, including federally supported research).

People overlook the ownership by employment argument because universities deploy a range of documents to make it appear that they have a right to ownership of inventions made by faculty–policy statements, regulations, acknowledgements, legends on disclosure forms, and even contract-like documents. With all those documents floating around, it’s clear that the university (somewhere, in some official’s brain) intends to own whatever it can own. But intention based on defective principles and procedures does not create a proper right. I can want that piano in the shop window, but I can’t break the window and threaten the shop keeper to get it. I have to use the proper procedure–offering to pay and having the shop keeper release title to me. Possession may be 9/10ths of the law, but possession by fraud is more difficult to maintain.

Most universities ignore their own policies, even as they read them as if the policies formed a unilateral (adhesion) contract with faculty. The court in Shaw v. The Regents of the University of California was clear–if a university policy forms a contract, then the university is not free to change later that contract with respect to anyone who had agreed to the contract in its original form. If a university changes its policy, it can impose those changes on new employees, or it can negotiate the change with existing employees. In employment law cases, changes in an employment contract that lack additional consideration have been found to be unenforceable. When a university asserts a broader right to own faculty scholarly work, but does not offer new consideration, then that broader right is challengeable.

The fact is, faculty are not employees of their universities for most of their scholarly activities, including research (in a similar way, state legislators are not employees of the state, though they are paid a stipend for their public service). Faculty furthermore are not employees for most of their IP work, including sponsored research. Intellectual property “employment” is not just folk-say “employment.” Academic freedom–also in university policies–for one, precludes a finding of such “employment.” It does not matter that a university HR department labels faculty as “employees” for the purpose of paying them–university policies on the faculty depict them as “appointees” and assure them of academic freedom in the conduct of their scholarship. What matters is the scope of that employment. Faculty get paid to do their “official duties”–and that payment acts as a stipend, a means of support, to allow the faculty to do their scholarly work, which is not, unless expressly contracted, a duty owed to the university. As for federally supported research, faculty are not assigned to work on grants; they propose research to the federal government and request release from their university duties to do that work if it is funded.

3. Eminent domain. Now consider a public university, an instrument of the state. The university determines that it must own private property to accomplish a public good–the university must have an invention made by a faculty member–a bit of personal property, according to federal patent law–so it can (when pigs fly) license that patent to a company to provide a public benefit (a new product, economic activity arising from sales of the new product, or at least inducing investors to throw money at the hope of such sales, or at a minimum getting money from a licensee for the right to try to seek out such investors).

For a public university to take private property, it must meet the constitutional standard for such taking–due process and just compensation. The due process part might be met by the policy statements on disclosure of inventions and the like. But the just compensation part is not met by a policy statement that shares a royalty on some never-may-happen future license of the patent. An inventor might *contract* for such a future benefit, as with an invention management agent, but it’s not “just compensation” to *impose* the deal on inventors when taking their property. Public universities generally *disclaim* that they are acting as agents for private individuals–the inventors–so go so far as to provide in policy that no royalties may result from a license (and so, nothing to share, no compensation at all). And yet a public university generally claims those inventions because they have “commercial value”–that is, because at the time the invention is claimed, it does have value, and therefore that value should be recognized in compensation paid at the time of the taking–the net present value of the property. If there’s no compensation, or only the token $1, then there’s certainly not “just” compensation.

Public universities will argue that their patent policy is a contract–but it’s a more difficult argument that they let on. Where’s the offer and acceptance? Where’s the consideration? Where’s the signature by the faculty member indicating agreement? What about all the other bits of policy that are clearly administrative? What about the idea that the policy is to be enforced on the university for the benefit of the (faculty and other) members of the university, not enforced on the members for the benefit of the university-as-corporate-overlord. If the policy is a contract, then the university cannot change that contract willy-nilly and must show offer, acceptance, consideration based on premises that do not run against public policy. And if the patent policy is not a contract, then it cannot be used to compel the assignment of subject inventions.

I have read hundreds of university patent policies. Most start out as administrative statements–they delegate responsibility for patent matters (often, in early policies, to a faculty committee), authorize use of university funds and facilities to support the development of inventions (once the invention has been made), and identify how commercial activity involving a patent should be conducted by inventors (generally, using an external agent or otherwise off campus and outside university activities). Claims to inventions were drafted narrowly–to those inventions one is hired to invent, inventions made in “official duties,” inventions the development for which the university has allocated special, significant resources to support. For these inventions, the claims often involved “equitable sharing of income” rather than an outright claim of invention ownership. Ownership was one form of equitable sharing–but only when the circumstances indicated that ownership was the appropriate outcome based on the university’s involvement. Merely using university facilities, or making an invention under the “auspices” of the university gave no rise to a claim of ownership.

After Bayh-Dole, university administrators moved to change their policies. They were told they must do this to comply with Bayh-Dole–utter nonsense. So they unilaterally changed their patent policies to require ownership of faculty inventions made with federal support, citing federal law. If your policy has such a clause, it was made unenforceable by the US Supreme Court in its 2011 decision in Stanford v Roche. More importantly for our discussion here, the universities also greatly broadened the scope of the stuff they claimed–not just patentable inventions, but also non-patentable inventions (which aren’t rightly ownable at all), software, data, know-how, show-how, cell lines, rodents, and ideas–anything conceived, short of one’s children. If all these things are subject to a claim of ownership based on a policy and employment, and not on institutional authorship (i.e., abrogating academic freedom, making the case that the state should control faculty scholarship) and on a patent agreement independent of employment, then the state via the public university is engaging in eminent domain taking. Lacking just consideration for the value of the properties taken, the process is unconstitutional, and the title the state claims in all such works of faculty scholarship, including subject inventions, is challengeable.

4. Exclusive licenses as assignments. Universities and nonprofits are subject to special restrictions in the standard patent rights clause–restrictions not imposed on small companies or on inventors should they retain their invention rights. One of those restrictions is at 37 CFR 401.14(a)(k)(1):

(1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions, provided that such assignee will be subject to the same provisions as the contractor;

This requirement carries multiple conditions: the assignee must have a primary function in managing inventions; if not, then the agency must approve; and in any case, the university has to flow down as well the patent rights clause.

Here’s the rub. An instrument is defined by what it does, not by how it is labeled. If an exclusive license transfers substantially all of a patent owner’s rights to the licensee, then it is an assignment. So if there is no field of use restriction, and the license is world wide, and the licensee has a right to sue for infringement, then the exclusive license is *actually* an assignment and subject to (k)(1). It may be that the licensee does have an invention management function–but is it a primary function? If not, did the university get federal approval to make the assignment (it’s not enough to label an assignment “exclusive license” to avoid the regulation)?

But here’s the worst part for the university: did the university, with the assignment, also assign the patent rights clause (or flow it down) as a condition of the assignment? Flowing down the patent rights clause is not the same as requiring a licensee to report on utilization and to mark patents as subject to government rights, or to (this is goofy, but it takes time to see how sad it is) require that sales to the government do not charge the royalty that the university otherwise expects (because the government has a “royalty-free” license from the university–for another time). No, the requirement in (k) is not a selection of obligations so that the university might comply (selectively, of course) with the patent rights clause–the requirement is that the assignee comply with that clause. That would include, for instance, (k)(3) that the *assignee* share royalties with *the inventors*, that any excess income beyond costs of administrating the subject inventions will be used for scientific research or education (not, say, to pay dividends to company owners).

If the subject invention has been assigned to a company by means of an unlimited exclusive license without agency approval and without a full flow down of the university’s patent rights clause, and the university is in cahoots with its licensee-assignee to bring a suit for infringement, then the standing to sue is challengeable on the basis that the assignment by the university should be voided. Furthermore, if the licensee-assignee seeks financial damages, anything so obtained must also be subject to (k)(3)–essentially, the licensee must reinvest in research and education, not simply pocket any award of damages.

Now to the two final arguments, ones that matter the most.

5. Bayh-Dole exhaustion. The Bayh-Dole Act establishes the objectives of federal funding agreements involving research conducted at universities with the support of federal funds. The patent rights clauses are incorporated into funding agreements within the scope and authority of those objectives. The objectives are set forth at 35 USC 200, as part of the patent law (bold added):

It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally supported research or development; to encourage maximum participation of small business firms in federally supported research and development efforts; to promote collaboration between commercial concerns and nonprofit organizations, including universities; to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery; to promote the commercialization and public availability of inventions made in the United States by United States industry and labor; to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions; and to minimize the costs of administering policies in this area.

There are a number of objectives, but they all depend on the first statement–to use the patent system to promote the use of subject inventions. A read of the Bayh-Dole Act, the implementing regulations, and the patent rights clauses makes clear that the purpose of the new, uniform approach to contracting is to use patents to encourage the “practical application” of subject inventions. “Practical application” gets a definition in the law and again in the implementing regulations and yet again in the standard patent rights clause. “Commercialization” does not get a definition, though it shows up as an objective–but only in parallel with “public availability”–the controlling concept is practical application. Commercialization is clearly subordinate, as one method of practical application, but not the only one, and not the primary purpose of the law. Whatever the primary purpose of a university administrator might be, the purpose of the law is to use patents to promote use.

Now consider a subject invention. A university acquires the patent rights, files a patent application, and receives a patent. That patent is subject to both the patent rights clause of the funding agreement and to the statement of objectives for Bayh-Dole in US patent law. Otherwise, one reads Bayh-Dole as if there is no statement of objectives, that the objectives do not matter, have no effect on the law. I argue such a reading is wrong, that the objectives do matter–that they are essential to the scope of the law and what an owner of a patent on a subject invention can do with that patent.

If the objective of the law is practical application, then when practical application happens, the law has achieved its purpose. It is a “unreasonable use” of a subject invention to use the patent to stop use under a claim of infringement. This is “Bayh-Dole subject invention exhaustion.” Just as there is an exhaustion of certain patent rights upon a first sale, so also there is an exhaustion of certain patent rights when there is practical application. Whoa. There’s plenty of cognitive dissonance in this idea. How then does the patent system get used to promote use, if once there’s use, then the patent owner can’t sue for infringement?

Let’s qualify things to get at what rights are exhausted. Consider a simple, usual case. The university obtains a patent and sits on it for eight or ten years with no licenses whatsoever. Off somewhere in Vermont, a company creates a product that uses a method or system or compound that comes within the scope of claims of the invention (equivalents, and the like). The patent owner is constrained by Bayh-Dole to use the patent promote the use of the invention–so it lacks standing to use the patent to prevent use. That is, the university cannot use its patent to block a use of the invention as a means to promote the use of the invention. Doing so is “unreasonable.” The principle here is, if the university has not itself achieved practical application, and does not have at least one contract with a company that has achieved practical application, then the university lacks standing to sue for infringement. Infringement, for a subject invention, is not simply the use of an invention within the scope of claims of a patent owner. Infringement must be a use of an invention that is unreasonable or that runs against “free competition and enterprise” or that “encumbers future research and discovery” or that fails to use “United States industry and labor.” To sue for infringement of a subject invention, a patent owner must show a cause based in the objectives of Bayh-Dole. The cause cannot merely be infringement–because the fundamental purpose of Bayh-Dole (and the implementing regulations, and the patent rights clause in the funding agreement) is practical application. One cannot sue to stop what the law exists to promote. One must have some other cause of action authorized by patent law–and for subject inventions, the causes of action are laid out in the Policy and Objective section at 35 USC 200.

Practical application–use–exhausts the right to sue for infringement alone by the owner of a patent on a subject invention. Practical application is the objective of the law. A patent may exist to encourage use. How? Many ways. Here are some. One, by making formal and public the scope of the invention, so that companies can operate with some clarity regarding the invention. Two, by providing common access to the invention, so that no single company can exclude others from an invention that the public has funded. Three, by providing a basis for barter for improvements, so that a patent on a fundamental invention is released to a community in exchange for no member of that community blocking improvements–just what we find in standards organizations and patent commons. Four, by providing a rationale for private investment of substantial resources in developing an invention that otherwise would not be developed. There’s a big condition in that “otherwise would not be developed.” Five, by underscoring instruction in the use of the invention–not only does one get training in the invention, but also receives a right to practice the invention (not necessarily the *only* permission needed, but often an excellent foundation). Six, to protect a standard from abuse or misuse by those citing the standard but failing to properly implement it.

Most of these ways involve non-exclusive relationships. Non-exclusive relationships are most consistent with encouraging practical application, promoting collaboration, ensuring free competition, and avoiding encumbering future research and discovery. Non-exclusive relationships are most consistent with protecting the public from nonuse (including nonuse by the university patent owner) and unreasable use (including unreasonable use by the university patent owner, such as suing to block the use of a subject invention on the premise of infringement alone).

There are other uses that a patent can be put to. A patent can be sold off to a patent litigator–a patent troll, say, to go beat up an industry. A patent can be licensed to a shell startup company in the hopes of attracting investors, who then direct their money to making some other product, or if they are clever but not skilled, who aim to make the shell company look attractive enough they can sell their stake at a profit, with nothing ever produced by way of product. In such cases, the university makes money (with metrics and stuff for press releases–a patent, a license, even investment, the *potential* for beneficial products and economic vitality from research). But these “uses” of a patent are not within the objectives of Bayh-Dole. A patent owner does not have standing to sue for infringement without citing a public cause of action–one derived from the objectives of the law as an extension of patent law. Any other reading simply dismisses the objectives of Bayh-Dole as a silly preface without any meaning. The objectives of Bayh-Dole have meaning, and that meaning constrains the causes upon which a university (or its assignee) can sue for infringement.

6. University chooses to become a trustee. Bayh-Dole is not the only law that shapes intellectual property requirements in federal funding agreements. 2 CFR 215, which controls many funding agreements with universities, includes another section that matters, .37 “Property trust relationship.” 

Real property, equipment, intangible property and debt instruments that are acquired or improved with Federal funds shall be held in trust by the recipient as trustee for the beneficiaries of the project or program under which the property was acquired or improved….

2 CFR 215.2(s) defines “intanglible property and debt instruments” (bold added):

(s) Intangible property and debt instruments means, but is not limited to, trademarks, copyrights, patents and patent applications and such property as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership, whether considered tangible or intangible.

If a patent right is acquired (or improved) with federal funds, then it comes within the scope of 2 CFR 215.37. Such intangible property is to be managed by the university as a “trustee” for the beneficiaries of the project. Let’s pull this apart, bit by bit. First, “acquired … with Federal funds.” If an inventor voluntarily assigns an invention to a university, say in exchange for the university’s services as an invention management agent in filing a patent application and seeking licensees, that invention is not acquired with federal funds. The transaction is outside the funding agreement, and the university does not spend federal funds in acquiring the patent or the patent application.

However, things are different if the university claims that it owns the patent as a consequence of Bayh-Dole, federal funding, university facilities, or employment. In any of these instances–an most university policies cite at least one of these, often most–then the university asserts that federal funds are indeed used to acquire the patent, because the federal funds are themselves a condition of the university claim to ownership. The government reimburses the university for the use of facilities. The government reimburses the university for employee time. The government makes no requirement that the university own patent rights in subject inventions.

When a university acquires patent rights under any of these claims, it uses federal funds and becomes a trustee of the rights, no mere owner of the rights. A university does not have to use federal funds to acquire patent rights in subject inventions. That’s a choice universities make. That is what happens when university administrators change their patent policies to make university ownership a condition of employment, or of federal funding, or of use of resources–all things that are not a matter of patent law. When a university expressly conditions its right to patents on such claims, it changes the basis on which it acquires those rights and chooses to come within the federal requirement at 2 CFR 215.37.

Now, what does it mean to be a “trustee” rather than a mere owner. A trustee holds a property on behalf of others. Further a trustee is a fiduciary–the commitment of the trustee is to the well being of the beneficiary. It is a breach of the fiduciary obligation for a trustee to manage a property placed in trust for the trustee’s own benefit or the benefit of others who are not the beneficiaries of the trust. 2 CFR 215.37 identifies the beneficiaries of any patent management, including litigation: “the beneficiaries of the project or program under which the property was acquired or improved.”

So, to understand who the beneficiaries are, one has to look to the Request for Proposals and to the proposal that was funded to see who the government and the faculty investigators committed to benefiting. We may also look to the objectives of Bayh-Dole, as these come into play when a subject invention is patented. In almost all circumstances, unless the university is expressly named as a beneficiary, we can rule the university out. The inventors, too, are not likely to be beneficiaries of the project–the funding is to promote their research, not their careers or their personal finances. So we have to look to the public and to industry for possible beneficiaries. Whoever they may be, the university must act as a trustee on their behalf if it has acquired a patent on a subject invention using federal funds.

If a university sues a company for infringing a patent on a subject invention, and the university has acquired the patent using federal funds (by its own choice), then the university must show in its cause of action something other than infringement–it has to show that the action is necessary to meet the university’s obligation as a trustee on behalf of the grant’s beneficiaries. If those beneficiaries, however, include companies, then the university simply cannot bring the lawsuit. A trustee cannot sue a beneficiary in the name of benefiting the beneficiary. Oh, I suppose there are pathological cases that support such a thing, but the general expectation is not based on pathologies.

Let’s underscore this last argument. It does not arise from Bayh-Dole or the standard patent rights clause. It arises from a separate requirement in the standard grant clauses that form a federal funding agreement with a university. That requirement becomes active when a university chooses to acquire patent rights based on a claim in policy that relies on a use of federal funds–employment (in a federal grant), use of resources (reimbursed by a federal grant), as a condition of participation (in a federal grant), under the auspices of the university (in a federal grant). Once a university makes such a claim and acquires patent rights, it becomes a trustee, not some ordinary patent owner. The university is not free to sue anyone it pleases for infringement, nor is it free to sue merely for infringement. It must show that it is meeting its federal obligation as a trustee–both to the government and to the beneficiaries of the federally supported project. For technology-based projects, it’s hard to see how the university can sue companies using the results of the research when the purpose of Bayh-Dole is to encourage the use of the results of the research by those same companies.


This has been a long way around to an answer to the question whether a university has an unconstrained right to sue for infringement of a patent on a subject invention. Invention management for subject inventions is potentially very different from invention management in general. The difference is not merely in the federal reporting obligations–fundamentally, the purpose, the attitude, the methods, and results are different. A university cannot simply adopt “corporate” or “patent agent (or troll)” methods of obtaining and licensing patents based on subject inventions. Such advice is not good advice. Such practices are generally inappropriate, non-responsive, breaches of federal funding agreements, and violations of both federal regulation and the public trust.

Just because universities ignore provisions such as 37 CFR 401.14(a)(f)(2) and (k)(1) and (k)(3) does not mean these provisions don’t operate. Just because universities ignore 35 USC 200’s objectives does not mean they are a sweat but inoperative preface to otherwise inspired legislation. Just because universities ignore 2 CFR 215.37 when they change their patent policies to claim rights in subject inventions as a condition of the use of federal funds does not mean that universities are not still trustees of those patent rights by federal regulation. Just because no company has asked a court to consider any of these defenses to infringement of a subject invention does not mean these defenses are not available. Courts generally do not go out ahunting for better arguments that a party to litigation might make. Judges deal with what presents, and what is submitted as evidence, and what is argued. What’s not presented and argued is assumed not to be under dispute.

Perhaps someone will give a court new arguments to consider, as Roche did in defending itself from Stanford’s claims regarding Bayh-Dole. Much better, of course, would be for universities to stop living life in the fast lane and, to mix the song analogies, to come to their senses. If they want to sue for infringement, then they need to make their acquisition of subject inventions a matter of voluntary assignment by inventors. If they want to own federally supported inventions outright, then they need to respect their roles as trustees and sue for infringement only when there is a cause of action within the authority of the objectives of Bayh-Dole and to protect the interests of the beneficiaries of the federal projects within which the subject inventions were made.


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