There has been plenty written about the practice lesson taught by the Supreme Court decision in Stanford v Roche. I’m dismayed how much of it shows no evidence of an awareness of the facts of the case and the primary documents. In a way, it’s just academic and legal bullshit, offered to scare up new business. In another way, though, it is a symptom of folks who really want more institutional (or corporate) control over inventors and their intangible assets, mostly so they can speculate with those assets. It’s a strange way to advance science or encourage technology change.
The problems with Bayh-Dole are not merely those of poor reading abilities by academic and legal folks–though that is a problem, too. The purported authorities on Bayh-Dole led the effort to install a faux version of Bayh-Dole in place of the law that was enacted and implemented. Seventy plus universities along with their front organizations, Senator Bayh, and the U.S. Solicitor General all weighed in on the case with amicus briefs to the CAFC and SCOTUS, asserting that the faux Bayh-Dole was law, that Bayh-Dole without having to actually say so handed rights to patentable inventions to federal contractors.
None of these folks could agree on just how Bayh-Dole worked–a right of first refusal, a second right of refusal, a presumption of ownership, vesting of ownership on election to retain title, vesting of ownership on notice to the government of election to retain title, a prohibition on inventors assigning to anyone but the university, or automatically by operation of law. The pure variety of sober-faced accounts of how Bayh-Dole must operate argues for the conclusion that it’s all made up. And it was all made up. The faux Bayh-Dole was created by picking, presuming, and asserting, not by relying on the words written into law.
Senator Bayh in his amicus brief was particularly adamant that inventors were intended to come last in the pecking order. Read through his account of the pecking order, and then we will read it closely for the picking, presuming, and asserting.
It’s all so clear, no? Sounds logical, orderly? Everything backed up by citations to the law? The man who co-sponsored the bill? Persuaded? Consider, then.
The problem here is that there is nothing in the law to distinguish between rights within a contract (the ownership rights of contractors)–and rights established by law (ownership rights of inventors). The language Senator Bayh chooses assumes the conclusion in the premise–a classic form of begging the question fallacy. Senator Bayh’s problem is Constitutional in scope, but he does not acknowledge it.
For patent law, the scope of authority established by the Constitution for the federal government is to reserve rights to inventors and authors. Bayh-Dole would have to somehow decree contractors to be inventors, rather than inventors being inventors. One might distinguish an author from a producer of tangible expression when the author specifies the work and a technician produces it. That’s the argument in works made for hire under federal copyright law. The employer or commissioning party controls the expression and therefore exercises authorial control. And that’s what happened with the Lindsay v Titanic case, where a videographer plans the scenes, reviews the video, and accepts what he wants to use. He’s the author, even though he did not operate the cameras or supply the equipment, and even though those doing the work were not paid by him and were signed to contracts under which they were working for hire for a company, not for the videographer.
But it’s a whole other thing to argue that an employer can get inside an inventor’s head and conceive an invention for the inventor. If the employer already knows, then the employer has already invented. If the employer doesn’t know, then there’s no way the employer is the inventor. The Constitution gives Congress authority to reserve exclusive rights for inventors, not for employers of inventors. So Senator Bayh is far afield from what Bayh-Dole as federal patent law can do. He envisions that Bayh-Dole (part of federal patent law) secures rights for universities and for (small) companies–contractors–in the inventions made by individuals. I don’t see a Constitutional foundation for the federal government having such powers.
Here we have the ambiguity of “retain title” having to create a “presumption of ownership” because somehow Bayh-Dole never could bring itself to state that contrary to the Constitution and common law, title would vest in contractors, not individuals. Yes, there are limited instances in which Congress has used vesting to secure rights in inventions for the federal government–in stuff like atomic bombs. But in those cases–AEC and NASA– Congress claims more than patentable inventions or even inventions made under contract, and the effect is to limit the scope of subject matter available for private patent claims. That’s different from simply changing who owns an invention as an act of federal law. Those “vesting” statutes never carried such a broad dismissal of rights for a whole class of inventors simply because the inventors receive federal funds through their employers to support their work.
But more so, Senator Bayh leaves out part of the definition of subject invention. A subject invention according to the definition at 35 USC 201(e):
The term “subject invention” means any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement.
The “of the contractor” means an invention owned by the contractor, not just any invention made with federal support. The AIPLA amicus brief makes this point and the Supreme Court makes use of AIPLA’s argument. (And hey, Research Enterprise raised this issue too (November 2010)):
Further, look at the definitions. What makes something a “subject invention”? If it is a subject invention for one co-inventor, is it a subject invention for other co-inventors even if they were not working with federal funding? Or is only a subject invention insofar it is an invention “of the contractor”?
Why is the definition limited to “any invention of the contractor”. What does “of the contractor” do by way of limiting the scope of subject invention? Does “of the contractor” mean “already owned by the contractor” or “claimable by the contractor by some means” or “made within the planned and committed activities of the grant” or “made by contractor employees other than clerical and non-technical employees in performance of work under this contract”? Is there a reason why “of the contractor” here is a general possessive and not more specific?
We may ask, what makes an invention “subject”? It may not be a new invention–since first actual reduction to practice may trigger the designation. Is it possible that an invention, to be subject has to be claimable by the contractor under some means the contractor has established for this purpose rather than one that the contractor is entitled to by operation of law? That is, an invention becomes a subject invention within the context of the funding agreement when it meets all the elements of the definition, and no other inventions can be made subject inventions by private agreement if they do not meet the elements of the definition.
Sean O’Connor did an excellent job chasing down the legal citations and making it clear that “of the contractor” was not mere “surplusage” in the law, but rather meant something reasonable and should be read therefore for that meaning. “Of” means “owned by.” Here’s the Supreme Court discussion of the matter, so it’s at hand.
“Of” is the most important word in Bayh-Dole. And that “of” bit is what Senator Bayh leaves out of his quote of the definition of subject invention. Bayh-Dole is about ownership but the very bit about ownership gets dropped in making a case about ownership. Fascinating rhetorical dancing.
Moving along in Senator Bayh’s intended order of ownership, we encounter next the government. Again, for Senator Bayh’s scheme to work, we must start with the argument that there is no ownership of an invention until the thumbs of institutional bureaucrats have had their chances to pin it down. But even here Senator Bayh gets his own law wrong. The government’s rights to subject inventions is more extensive than Senator Bayh represents. The government can receive title (35 USC 202 (1)-(3)):
that the Federal Government may receive title to any subject invention not disclosed to it within such time.
that the Federal Government may receive title to any subject invention in which the contractor does not elect to retain rights or fails to elect rights within such times.
that the Federal Government may receive title to any subject inventions in the United States or other countries in which the contractor has not filed patent applications on the subject invention within such times.
How can it be that title is nowhere, but that the government “may receive” that title if the contractor fails to disclose a subject invention, or does not elect to retain rights or fails to elect rights or doesn’t file patent applications? Where is title that it may be received? Senator Bayh doesn’t use “receive”–the language of his law–but instead uses “claim,” as if title is nowhere until it is claimed. “Receive” is not the same as “claim.”
The implementing regulations follow this same line of development. Under the heading “Conditions When Government May Obtain Title” (37 CFR 401.14(a)(3)), the standard patent rights clause states that if the specified conditions are met, then
The contractor will convey to the Federal agency, upon written request, title to any subject invention—
Nothing here about “claim”–“convey” is the antecedent verb to “receive,” specifying who will do the delivering. Further, the verb is “convey” not “assign.” And the government “requests” title. From whom? The air? Here’s 35 USC 261 on transfers of title:
An interest that constitutes an assignment, grant or conveyance
Here’s the MPEP gloss on assignment (emphasis in the original):
“Assignment,” in general, is the act of transferring to another the ownership of one’s property, i.e., the interest and rights to the property. In 37 CFR 3.1, assignment of patent rights is defined as “a transfer by a party of all or part of its right, title and interest in a patent [or] patent application….” An assignment of a patent, or patent application, is the transfer to another of a party’s entire ownership interest or a percentage of that party’s ownership interest in the patent or application. In order for an assignment to take place, the transfer to another must include the entirety of the bundle of rights that is associated with the ownership interest, i.e., all of the bundle of rights that are inherent in the right, title and interest in the patent or patent application.
But under Bayh-Dole, a contractor may retain non-exclusive rights, even when the contractor does things (or fails to do things) that permit the government to “receive” title. Here’s 37 CFR 401.14(a)(e):
(1) The contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the contractor fails to disclose the invention within the times specified in (c), above.
The contractor’s right extends to subsidiaries and affiliates and includes sublicenses the contractor was obligated to grant when the funding agreement was awarded–a fascinating practice tip in terms of letting the government handle any patenting while ensuring that companies had the rights they desired. It’s truly amazing that universities have not exploited this part of the standard patent rights clause:
The contractor’s license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the contractor is a party and includes the right to grant sublicenses of the same scope to the extent the contractor was legally obligated to do so at the time the contract was awarded.
How can the contractor “retain” a license regardless of whether it has held title? And is “convey” used here precisely because “assignment” would require the contractor to transfer the “entire” bundle of rights, and that’s not what the standard patent rights clause, at least, contemplates?
Senator Bayh misstates the law–the government does not “claim” title–the government requests title, and the contractor conveys title, and the government receives title. Words mean things–that’s a premise of statute and contract interpretation. It’s not that we quibble over words–it’s that we disagree on meanings, and meanings is what we are dealing with. Senator Bayh is not “taking a shortcut” or “using a term loosely”–he makes an argument to the Supreme Court based on something that isn’t in the law. If there is ever a time for not speaking falsely, or writing loosely, this is it. How do we account for that?
There’s more. The standard patent rights clause requires the (f)(2) agreement, and has an apparatus for it. The contractor is to require it of the contractor’s employees. Bayh-Dole doesn’t require this written agreement; the standard patent rights clause authorized by Bayh-Dole does. And the (f)(2) agreement is not a patent agreement between the contractor and its employees requiring employees to assign to the contractor. If folks had wanted that language, it was in the IPAs, and folks also insist that Bayh-Dole was just implementing the IPA (which is also not true, but for another time). Here’s the clause in an IPA:
That’s pretty clear. And it’s also clear in the IPA that a subject invention is any invention made with federal support, regardless of ownership. Further, the university contractor is allowed to obtain assignment of subject inventions only for those inventions that the university has decided to patent. In the IPA, subject invention is broad, the obligation to assign is narrow, and what the university is allowed to own comes by federal contract, not law.
And these words aren’t in Bayh-Dole. Instead we get something completely different in the implementing regulations:
The contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the contractor each subject invention made under contract in order that the contractor can comply with the disclosure provisions of paragraph (c), above, and to execute all papers necessary to file patent applications on subject inventions and to establish the government’s rights in the subject inventions.
Again, the IPA: patent agreements
- promptly report
- assign to Grantee or its patent management organization only if Grantee elects the option to administrate the invention
(f)(2): written agreements
- disclose promptly
- execute papers to file patent applications
- execute papers to establish the government’s rights
These are not at all the same instruments. The IPA agreement is between the university and its employees and requires the university to require assignment to the university. (See the discussions here and here and here for more on IPAs.)
The (f)(2) agreement is on behalf of the government and requires the university to require employees to make an obligation to the government. The standard patent rights clause makes this evident by distinguishing the (f)(2) written agreement from “employee agreements”:
The contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars.
Employment agreements are for instructing employees on the importance of timely disclosure of inventions. If folks had wanted to add an assignment requirement to these employee agreements, this was the place to state it. The (f)(2) written agreement is not the “employee” agreements that have to do with the university’s relationship with its employees. The (f)(2) written agreement is part of the funding agreement with the government, a federal matter.
There is nothing obscure or confusing about this, except in the faux version of Bayh-Dole. How can it be possible that inventors are to make an agreement to “establish the government’s rights” if they never have title until the government has decided not to “claim” title? It just doesn’t work that way. There has to be some strong automagic at work for title not to vest anywhere and yet for there to be a formal requirement that worries rights inventors apparently have but don’t have. Perhaps those other rights are invisible “dark energy” rights that exist in some alternate legal universe. Dunno. What’s clear is that the government does not claim title from thin air but expects rather to receive title from someone who holds title–and that must be, first, the inventor, and next, anyone that the inventor has assigned title to.
The (f)(2) agreement makes inventors party to the funding agreement. The IPA requirement regarding assignment did not do this. The standard patent rights clause requirement on the university to delegate certain key obligations to research employees means, under the definition of funding agreement, that when they invent, they become contractors, and they own their inventions, and as a result, these inventions are “of a contractor” and the inventors are obligated to convey rights to the government if the conditions allow the government to request title.
The same thing happens with subcontracts (see 37 CFR 401.14(a)(g)). When a university complies with the requirement to obligate the subcontractor to comply with the standard patent rights clause, the subcontractor to the university becomes a contractor to the government within the definitions of Bayh-Dole (35 USC 201(b)):
The term “funding agreement” means any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government. Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.
Subcontracts are part of the funding agreement. The (f)(2) written agreement is part of the funding agreement. While a subcontract is a matter of state law, the subcontractor’s relationship to the government follows federal law. And federal law takes precedence over state law.
I know this is not as easy to follow as Senator Bayh’s account. It’s just that Senator Bayh’s account is as untrue as it is superficially pleasing. Explaining how Bayh-Dole works is like trying to find order in the composition of a sausage. It can be done, but is not as pretty as the faux Bayh-Dole, which is all about the packaging and not about the rendering. Turn away, if you prefer your law based on marketing.
In Senator Bayh’s account, inventors are last in line. The idea is that they are excluded entirely from ownership until universities and government agencies have picked over their work first:
All the inventor has, in this account, is a “provisional, subordinated ability to obtain title.” In this reading, Bayh-Dole is an all-out attack on inventors. They are hens laying eggs in the cages of federal funding agreements, and Bayh-Dole’s vision is that the eggs are owned by the farmers (contractors) or landlords (government) and never by the hens until someone decides that maybe the hen can waste its time and energy sitting on its damn egg until–bah–it hatches or rots or whatever it is hens do with eggs when they aren’t being productive and cooperative.
According to Senator Bayh, “under the statute, neither the contractor nor the government requires the inventor’s permission to develop their respective statutory rights.” If this were the case, then then there would be no need for the government to “receive” title, nor for there to be any need for either an (f)(2) written agreement or an IPA-style patent assignment. In the faux Bayh-Dole, the rights vest with grubby bureaucratic fingers first, not with inventors. In Senator Bayh’s version of the law, electing to retain title means to “claim” title from the air, not take title from any inventor. One wonders, if Stanford really believed this version of the law, why did they bother to obtain assignments from their inventors three years after they filed patent applications? Why didn’t they just record their interest in the PTO directly, obtaining it “by the operation of law”? And why do all those other universities that signed on to the various amicus briefs that argued some version of vesting–why do they all use assignment documents for subject inventions–every damn one of them? Because they are just making things up? Or because they are incompetents? Or [the rest of the list of bad things]?
Senator Bayh goes on to a truly incomprehensible bit:
Rather, the nonprofit contractor has a responsibility to negotiate a share of royalties with an inventor.
The law has this:
a requirement that the contractor share royalties with the inventor
There is nothing in the law that provides for a negotiation. What is the basis for the inventor to negotiate? The inventor, in the faux version of Bayh-Dole, has no rights in any invention. That’s what Senator Bayh has just asserted as fact:
the inventor has no direct ownership interest
neither the contractor nor the government requires an inventor’s permission
If there’s a negotiation, then there has to be something to negotiate over. This appears to be more like a deal that keeps getting worse all the time. It’s not really a negotiation at all. A university must “share” royalties, but that could be $100. Or it could be $10 and a pair of clown shoes. There is a point about negotiation of a share of royalties to be had, but Senator Bayh is not about to make that point. I will.
- Inventors own their rights to inventions made with federal support.
- Bayh-Dole does not disturb those rights.
- Universities have to get rights by an assignment agreement.
But it is not as simple as putting a present assignment in patent policy or making assignment a condition of employment or threatening university personnel with legal action or charges of unethical behavior.
First, complying with the (f)(2) requirement makes a university waive its own claims to invention ownership as a matter of policy or employment agreement. The reason for the sausage-style apparatus–regulation requires agency to require university to require inventors to make a commitment to the government–is precisely to protect the inventor from a claim made by a university based on its receipt of federal funds. Those funds are a subvention to assist the investigators, not to position the university to abuse its receipt of federal funds–funds made available to support the work of individuals. The university is compensated by the government for the salary of these individuals, their direct expenses, and the estimated administrative and facilities expenses involved in supporting federally funded projects. The university is compensated for releasing its personnel to do the work the personnel have proposed to the federal government and committing to supply the resources so they can do that work. A university has no basis for then using its position as administrator of funds to demand ownership of inventions made in the federally supported project.
The (f)(2) agreement is parallel with the subcontracting requirements in (g). In subcontracts–a written agreement that delegates work–the contractor is expressly forbidden to use its position as a contractor to claim rights from subcontractors:
The subcontractor will retain all rights provided for the contractor in this clause, and the contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor’s subject inventions.
To the extent that the (f)(2) agreement is a compulsory subcontract under the funding agreement, this same prohibition holds. But even if it is not a subcontract (I rather think it is–it is clearly the substitution of parties, since the university is not also party to the (f)(2) agreement–it is not that the university and its research employees must together make a written agreement), the (f)(2) agreement displaces any competing university policy or employment claims. There may be a patent agreement, but it has to be separate from employment in the federally funded work and from any condition of using the resources made available to research personnel to do the federally funded work.
If there’s a separate patent agreement, then it is the consideration in that agreement that is negotiated. And under Bayh-Dole, there is absolutely no requirement that there be any patent agreement. Bayh-Dole through the standard patent rights clause is self-implementing. That’s one decent thing about this sausage. It’s pre-cooked. So out go “as a condition of employment” (staff are released from that employment to work with government funds) and “in consideration of the use of university resources” (the university commits those resources as a condition of the funding and is compensated for doing so–those resources cannot also be consideration for patent assignment). It’s possible that a university’s royalty sharing scheme is appropriate consideration–but only if the patent agreement is voluntary–that an inventor (foolish or desperate) agrees that placing an invention with the university is acceptable consideration, regardless if there is ever any payment from the university. Otherwise, there would have to be some requirement in a compulsory deal that the university will be diligent in securing paying licenses. Many–if not most–university patent policies provide one or more back doors that relieve the university of any such obligation–they can license at no charge or they can decide not to continue patenting or they can offer rights back or they can waive their own policy (as, by contracting otherwise). If assignment is compulsory, then, again, there’s no negotiation and no consideration–and so there’s this problem in 35 USC 261 with regard to “a valuable consideration.”
There is no vestige in Bayh-Dole or in university patent policy practice that would suggest that federal law mandated a negotiation between universities and their federally supported inventors. The faux Bayh-Dole in fact does just the opposite–doing away with inventor opportunities to negotiate with anyone, not with possible invention management organizations, not with the university that hosts the research, not with federal agencies that support the research, not over transfer of ownership, not about money, not about whether a patent should be sought in the first place, not about whether it would be better to make an invention freely available for use rather than to tie up all rights in a demand that someone first make products for sale using the invention.
Unlike employment and use of resources arguments, when a university enters into a federal funding agreement on behalf of its personnel, the university participates in a subvention. The university administration cannot turn around and claim that it procures inventors rights as a condition of their work any more than it can do so with subcontractors. The (f)(2) and (g) sections of the standard patent rights clause make this clear.
There should be a negotiation, then, over royalties and other matters–one would expect a relationship between the inventor and any assignee that addresses not only royalties but diligence, strategy, and conditionals if the assignee fails to do what it is mandated to do–to promote the utilization of subject inventions, such as (but not restricted to) by entering into agreements for commercial development. Anything less would point to inventor indifference and that would be a warning sign that the invention itself was not going anywhere useful.
The faux Bayh-Dole, by cutting off all such negotiation with inventors, demands as a matter of public innovation policy that inventors accept indifference (other than that they are expected to be motivated by the thought that they might get some money, regardless of how the university sets out to make that money). Some public universities go so far as to inform inventors that because they have a financial interest in the “success” of the invention, they are therefore forbidden to attempt to influence any “transaction involving the state”–they cannot negotiate anything with the university and they cannot suggest anything with regard to licensing strategy, as they are presumed to make any such suggestion for their own profit (or to harm the state). They are to do only what they are instructed to do. Provide a list of companies. Identify all the possible applications. Sign these documents. Approve this description of the invention. These are not things that engages an inventor in the development of an invention.
None of this is, of course, in Bayh-Dole. In simple terms, once there’s a subject invention–or perhaps when there’s a new federal grant, a reasonable practice is for the university to make an offer to manage any subject inventions. If the inventors or investigators accept that offer, then together they can create a well-formed patent agreement. If not, then inventors or investigators may make an agreement with an invention management agent of their choosing, or may negotiate with the federal agency that provided the funding with regard to retaining rights. Despite the adamant refusal of most university patent administrators to imagine such rejection of a university role, there are university inventors and investigators who would rather see an invention enter the public domain or have the federal government hold rights than to see those rights in the hands of university bureaucrats, buried in piles of unlicensed technology or worse licensed exclusively into soon-to-be moribund shell companies to pitch the idea of economic development or much worser yet, licensed exclusively as puffery into companies that use the patents to get funding and then go off to make something else. Oh, yeah, that last bit does happen.
Senator Bayh concludes his account of the pecking order:
In very limited circumstances, an inventor can request title if the contractor and government eschew their rights.
Here we get the idea of “request.” Inventors can request title. But from whom or from what? Title in faux Bayh-Dole floats in the air until “elected” by a contractor or “claimed” by the government. But poor inventors are reduced to begging for title. But if the university hasn’t got title and the government hasn’t got title, then who is the request to? If inventors don’t have title at the outset, and give title up only by agreement, then this part of Bayh-Dole is a total mess:
If a contractor does not elect to retain title to a subject invention in cases subject to this section, the Federal agency may consider and after consultation with the contractor grant requests for retention of rights by the inventor subject to the provisions of this Act and regulations promulgated hereunder.
The government does not grant requests to convey title to the inventors, but that the federal agency may grant requests for “retention of rights” by the inventor. It’s as if the rights suddenly flutter down to the inventors after the government has decided it does not want them, but then the inventors have to ask the government for the rights anyway, and the government has to ask the university whether to let the inventors have the rights. Talk about a badly made sausage. The Supreme Court couldn’t make such a reading work and opted for clarity:
There never was the statutory mechanism that Senator Bayh describes. It is a fantasy composed of legal-sounding words that leaves out the essential elements that would restore the account to sanity. Of course, Senator Bayh was not crazy, nor were his legal advisors, nor were the folks that created faux Bayh-Dole when they were unable (incapable, incompetent, not allowed, failed) to create a law that overturned not only federal government executive orders and policy interpretations but also common law and the boundaries set for federal jurisdiction of patents as a means to reserve for to inventors for limited times rights to their inventions.
Senator Bayh makes clear his vision of prosperity does not include inventors:
There’s little doubt that the faux Bayh-Dole was what Howard Bremer and Norman Latker, among others, intended. But there’s no merit at all in the argument that universities in 1980 were “best situated to ensure the commercialization of new technologies.” Most universities left that work to external invention management agents and to the discretion of faculty inventors. Commercialization, for all that, is not a requirement of Bayh-Dole. Practical application is the goal. Use. Use with public benefits. Benefits available on reasonable terms. With American labor if there’s a monopoly license. Making products for sale under license (“commercialization”) is one way to achieve such practical application, if there are indeed products that are beneficial and reasonably priced and supported. But mere ownership by university administrations (or even affiliated “research” foundations) is hardly “commercialization.” Nor is licensing. Until there’s an actual product that meets the requirements of “practical application” all ownership and licensing amounts to nonuse.
The drafters of Bayh-Dole may have intended to cut inventors out, but they didn’t, so they misrepresented the law as if their intentions were law and the wording of law was just a technical afterthought that didn’t really figure except to support their intent. The drafters of Bayh-Dole may have intended that universities have the best capabilities to commercialize subject inventions, but they didn’t and still don’t have such a position, and Bayh-Dole did nothing to put them in such a position–no funding, no requirements on capability, no oversight, no accountability, no nothing. Howard Bremer even gloated in a keynote talk in 1992 (I think “gloated” is a fair verb here, in context) that universities had to step in and weaken the proposed march-in provisions:
Just to repeat that in lower case so you catch it: “a university group built into the regulations protection against . . . the exercise of march-in rights.” The grammar does not support the reading “arbitrary exemptions and arbitrary exercise”–it’s clearly arbitrary one and any of the other. The reason why march-in procedures have never been used is because university folks designed them not to work.
Senator Bayh’s view of the university role sounds wonderful. Universities were “best situated” to commercialize stuff and would serve as “stewards” of the public interest:
One might think fondly enough of universities or nonprofits as stewards, but why would companies come into this picture, simply based on their size? Is a small company committed to the public interest, but big companies are not? It’s difficult to fathom the reasoning here, other than that it sure sounds grand. But from another direction, it all sounds inventor-loathing and even a bit fascist. Federally funded inventions are too important to allow inventors to have anything to do with them. But even this argument is totally messed up. Here’s Senator Bayh on the problems caused by the federal government taking title to inventions made by university inventors:
Inventors “had little incentive,” so the argument goes, because the federal government took ownership. It’s as if university faculty gave up on their research when the government took title to inventions. Is there any evidence at all for this position? Even many defense contractors, who were allowed to own inventions made by their employees (by getting assignments, of course) decided not to bother with patents.
But look at the argument that Senator Bayh makes. “Separating inventors from their inventions was often catastrophic to the development of fledgling technologies.” So how is it that a Bayh-Dole Act that vests inventions “by operation of law” or with “presumptive title” with universities outright is not doing exactly the same thing–but with the stipulation that universities share (little or much, doesn’t matter) royalties with inventors (and universities don’t have to generate any royalties, don’t have to be diligent, don’t have to be capable, don’t have to account, don’t have any exposure to federal march-in). The contradiction is immense, the irony painful. The same document that claims Bayh-Dole puts inventors “on the lowest rung” of claims for title, that inventors have no rights in federally funded inventions until both the university and the government have feasted on these rights also claims that separating inventors from their inventions is “catastrophic.”
Senator Bayh’s amicus brief is not logic, does not cite the law accurately, and substitutes intention and desire for the rule of law. It’s dismaying and understandable. I respect Bayh-Dole in an odd way–sausage that it is–for not doing what Bayh, Bremer, Latker, and Allen have said it does, for not separating inventors from their inventions. Perhaps it’s not catastrophic to do such separating–and perhaps the reason is that federally funded inventions for the most part don’t matter to the directions commercialization takes in America. But perhaps, in another way, that separation has been catastrophic, and the Senate Judiciary Committee was on to something true among all the political blather that was not true.
If so, if separating inventors from their inventions is catastrophic, then universities creating policies to do such separating, not only for federally funded inventions but for all inventions, and not only for patentable inventions but for whatever–know-how, ideas, technological developments, materials, improvements, software–and the scope of the claim is not merely what’s done for an employer or what’s in the direction of the employer’s business but anything in the “field” in which the inventor has expertise–then we are beyond the alienation of the worker with his (or her) work. We are to a condition in which institutions harvest even more than corporations do, and for no purpose other than to exploit what’s taken for profit in licensing, not in practical application–and they don’t do a good job of that, even.
The vision of faux Bayh-Dole is one of inventor loathing institutional self-love. In faux Bayh-Dole, universities and their invention management licensing operations (along with small companies, for some reason) wear the mantel of public interest and assert that it is federal policy that they take ownership of inventions from their rightful owners, the inventors themselves. Their vision runs against the Constitution, runs against patent law, runs against the Senate Judiciary Committee concern back some thirty-five years ago.
If a university valued practical application through commercialization, it would take no money until there were royalties on sales–then everyone would be interested in seeing something happen. And if a university really valued practical application, it would grant a public license for all making, using, and having made, and deal only with the right of sale as a patent right worth licensing for a royalty.
Meanwhile, we have the damage done by the faux Bayh-Dole Act and its advocates. University administrators have created policies that separate inventors from their work, and these inventions pile up in licensing offices, which for the most part end up creating betting parlors for second-rate speculators, and when that doesn’t work, they play the patent troll. That’s some national policy for innovation arising from university research enterprise. We can do better. But first we have to run the rascals out.