We have looked at Bayh-Dole and at FOIA. The upshot is that the 1984 amendment that changed Bayh-Dole’s secrecy requirement at 202(c)(5) from “may” to “shall” apparently fails to meet the requirements of FOIA for withholding information. 202(c)(5) does not state that such information is secret. 202(c)(5) does not require an agency to contract to agree not to disclose information otherwise exempt from FOIA’s obligation to disclose. It does something screwy instead and makes it appear that if federal agencies rely on a provision in a funding agreement to require invention use reports, they have to treat the use reports as confidential and therefore as exempt from FOIA even if the information in the reports isn’t exempt from FOIA. Whew. I feel like I have bureaucracies on my bureaucracies.
We will get to an outcome of all this that makes all this work in tracing through the details of the particular language moot–remember, Bayh-Dole is a do WTF you want kind of law. But there is a point to working through the details that has to do both with how Bayh-Dole operates, and the consequences of that operation with regard to information about whether the law is accomplishing its purposes. Given that Bayh-Dole is barely enforced, we might wonder how a law that is not enforced can accomplish its purposes. Save that thought for a bit.
We have yet to look at what happens to secrecy in Bayh-Dole’s implementing regulations and the standard patent rights clause authorized by Bayh-Dole. The same person who packed Bayh-Dole with clauses for “political expediency” to get the law passed in a lame duck Congress as a parting candy gift to Senator Bayh (this is how important the law was to the Senate, apparently) moved over to the Office of Federal Procurement Policy (now the task is assigned to the Department of Commerce, which has for some reason delegated the task to NIST) to write the implementing regulations. At the Office of Federal Procurement Policy, the regulations could be shaped in all sorts of odd ways, such as making the procedures for march-in so convoluted they could never possibly operate. Let’s see what happens to secrecy in the regulations that implement Bayh-Dole, which requires agencies to treat invention use reports as exempt from FOIA.
A federal agency cannot just decide in the moment that it has the authority to make any information “privileged” or “confidential.” If an agency did have that authority, then there would be no point to FOIA. An agency could just declare everything it receives confidential. Wait–no–that’s just what Bayh-Dole requires agencies to do in their contracting for research with universities.
Let’s examine the rest of Bayh-Dole’s secrecy apparatus citing FOIA.
We have dealt with the general statement of exception to FOIA requirements that must be placed in any funding agreement via the standard patent rights clause. Next we have the implementing regulations that take up reporting secrecy at 37 CFR 401.8. After repeating that agencies have the right to request information on invention utilization from contractors, we get this:
(b) In accordance with 35 U.S.C. 202(c)(5) and the terms of the clauses at § 401.14, agencies shall not disclose such information to persons outside the government. Contractors will continue to provide confidential markings to help prevent inadvertent release outside the agency.
There are odd things going on here. I have highlighted four. First, 401.8 is not actually in accordance with 202(c)(5), so perhaps “in accordance with” means “in whatever way, if any, that 202(c)(5) actually requires.” Second, the standard patent rights clause at 404.14 has no control over the regulations–the control goes the other way. The law and regulations control what can go into the standard patent rights clause. Third, 202(c)(5) does not require agencies not to disclose–it requires federal agencies to treat use reports (the “such information” here) as exempt from FOIA. It does not impose a general secrecy obligation on use reports. That is, Bayh-Dole does not expressly state that use report information is not to be disclosed by an agency (that would be a FOIA exemption (b)(3) matter). If there’s general secrecy, it comes from the Trade Secrets Act, which we will get to. Fourth, 401.8 adds a strange statement with regard to confidential markings–something that has no basis in Bayh-Dole or anywhere else in Bayh-Dole’s implementing regulations or standard patent rights clause. Contemplate “will continue” (nothing has been required) and “to help prevent” (as if the markings are for convenience) and “inadvertent release” (because the primary problem is federal failure to secure information exempt from FOIA) and “outside the agency” (but the previous sentence says “outside government”–which is it?)
Bayh-Dole and its implementing regulation determines how the clauses of the standard patent rights clause are to be constructed. The standard patent rights clause so constructed cannot somehow dictate the form of the requirement here, in the implementing regulation. (Or, at least that might be a reasonable expectation–this is law… reason has its place, but it isn’t necessarily at the head of the table). The standard patent rights clause must be constructed to comply with Bayh-Dole. There is no apparent reason for “and the terms of the clauses at § 401.14.” The terms that matter are in accordance with 35 USC 202(c)(5). Otherwise, folks can slip in terms that aren’t in Bayh-Dole, and then write regulations that require them. And that is what they’ve done with clauses such as (f)(2) (the written agreement requirement for employees) and (g) (on subcontracting flow down).
But it’s worse than that, of course. 35 USC 202(c)(5) requires federal agencies to treat all utilization reports as exempt from FOIA, regardless of the nature of the information they contain. Thus, under Bayh-Dole, an agency has no obligation to comply with a public request for the information. That is, FOIA does not require the release of the report upon request–but an agency could release the report anyway, in accordance with law. It’s just that no one has bothered to require agencies to release any information with regard to the use of subject inventions, so it’s entirely possible that once information is excluded from FOIA, it is secret forever. No doubt this is the intention of the patent brokers. We are following in their footsteps, certainly not riding on the shoulders of giants in the process.
Bayh-Dole requires an agency to treat invention use reports as outside FOIA. FOIA already provides that commercial and financial information that is either privileged or confidential is also outside FOIA. Bayh-Dole has no need to repeat merely what FOIA–also federal law–already does. And Bayh-Dole has no authority to change FOIA–that is, Bayh-Dole does not amend FOIA to permit federal agencies not to release information that is not commercial or financial information or is such information but not privileged or confidential. If information is not excludable from FOIA under one or more of FOIA’s exemptions, then it is releasable information. If Bayh-Dole does not require “that the matters be withheld from the public in such a manner as to leave no discretion on the issue” and doesn’t “establish particular criteria for withholding or refer to particular types of matters to be withheld,” then the information fails FOIA exemptions. One might argue that “any such information” “on the utilization or efforts at obtaining utilization” is a “type of matter to be withheld.” But Bayh-Dole just requires this information to be treated as exempt from FOIA. That is not the same as requiring non-disclosure, which would make something exempt from FOIA.
In short, Bayh-Dole’s logic doesn’t work. It doesn’t comply with FOIA (b)(3)–no statutory requirement for secrecy. It isn’t needed for FOIA (b)(4)–already covers financial and business information that is confidential or privileged. And it can’t implicitly amend FOIA (b)(4) to exempt information that FOIA (b)(4) doesn’t exempt. All Bayh-Dole can do is stipulate that submitting use reports as required under a federal contract does not cause contractors to waive confidentiality in their information that is otherwise privileged or confidential, and that such information meeting (b)(4) exemptions is still exempt from FOIA. If information is exempt from FOIA, then federal agencies can contract to agree not to disclose that information. But why should such contracting not to disclose such exempt information be a matter for federal patent law, Bayh-Dole, or a standard patent rights clause?
Any information that meets (b)(4)’s exemption may be subject to such an agreement. Bayh-Dole does not require such an agreement–it merely requires information to be treated as exempt from FOIA. The implementing regulation, citing Bayh-Dole, insists that federal agencies may not disclose the invention use information they receive, but that’s only as good as FOIA permits. And the standard patent rights clause conforms to the implementing regulation and requires federal agencies to agree not to disclose more than what FOIA exempts. If a federal agency agrees not to disclose information it receives regarding actions taken under a federal contract, is that information then exempt from FOIA? No.
We should expect to see in the implementing regulations a requirement that federal agencies that request financial or commercial information in use reports ask contractors to mark such information as confidential or privileged if indeed it is confidential or privileged. But confidential markings for any other information has no effect. An analog is rights in data markings in federal contracts. If a university reports “we have made no use of this subject invention,” that information is neither commercial nor financial, and no marking of “confidential” will change that fact. The information is not exempt from FOIA, and Bayh-Dole’s 35 USC 202(c)(5) does not change that. But that’s not what the implementing regulations and standard patent rights clause do.
37 CFR 401.8 makes the claim that an agency shall not disclose. The implementing regulation for a law that would exempt some information in a report from public disclosure requests is turned into a regulation that requires non-disclosure of all information in the report. It is the implementing regulation for Bayh-Dole that suppresses the public release of all report information–there’s no “clearly delineated statutory language” that excludes such information, nor is all report information necessarily “commercial or financial information obtained from a person and privileged or confidential.” Bayh-Dole requires federal agencies to contract to exempt reports from FOIA. But FOIA, not Bayh-Dole, determines what can be exempted. FOIA does not permit federal agencies to exempt just anything, or to treat any information as if it were exempt information and thus make it exempt. Bayh-Dole, however, requires federal agencies to treat reports “as” information that is exempted. Are you with me so far?
A law can exclude information from FOIA’s general obligation to disclose.
FOIA excludes commercial and financial information received from a person when that information is confidential or privileged.
Bayh-Dole does neither. It requires federal agencies to treat as confidential any information they receive in invention use reports, regardless of whether that information is exempt from FOIA.
Bayh-Dole appears to circumvent FOIA even as it cites FOIA. The original version of Bayh-Dole did not have this defect, using “may” rather than “shall”–an agency may treat such information as excludeable from FOIA if it indeed is. That is, the agency has no statutory obligation to publish the information if the information meets FOIA’s exemption. The changed version of Bayh-Dole, substitutes “shall”–an agency must treat such information as excludeable from FOIA even if it isn’t. Do you see the problem now? The first version of Bayh-Dole cites FOIA. The second version circumvents FOIA or at least makes interpretation of what “shall” means almost impenetrable.
Under Bayh-Dole, federal agencies are required to contract to have the right to receive subject invention use information, whether that information meets the requirements of the FOIA exemption at 5 USC 552(b)(4) or not, and are required to contract that they will treat any report information as confidential and privileged and furthermore are required to agree not to release that information–regardless of whether the information actually is confidential or privileged. Even if the information otherwise would be required to be released by FOIA. Even if it would be a violation of FOIA to withhold the information. Essentially, Bayh-Dole requires federal agencies to contract with private parties to avoid complying with FOIA–even when the information received may be clearly subject to FOIA obligations to release.
And now the last sentence of the quoted part from 37 CFR 401.8, which must have come from aliens on Mars:
Contractors will continue to provide confidential markings to help prevent inadvertent release outside the agency.
Where does will continue come from? What practice of marking is being referred to that must continue? And what are these confidential markings? And why not also privileged markings (you know, “privileged and confidential”)? And want does to help add to the requirement? And how is it that first we find that an agency may not release the information outside the government and now the information cannot be released outside the agency. The previous paragraph of 401.8 deals with the format in which reports are to be provided–anything reasonable, essentially. The last sentence of that paragraph is this:
Copies shall be sent to the Secretary.
What Secretary is that? According to 35 USC 201(j) (as amended):
The term Secretary means the Director of the National Institute of Standards and Technology.
So all reports of subject invention use, by regulation, must be disclosed outside the agency unless the agency receiving the report initially is NIST. What’s fascinating is that Bayh-Dole names the Secretary of Commerce as the responsible authority for the drafting regulations (for sections 202 to 204–not others, so not 205’s confidentiality–and cannot touch the statement of objectives or the definitions). So one Secretary is responsible for the implementation of the law, including reporting, but another Secretary is responsible for receiving copies of the reports. I wonder how often the two Secretaries get together to compare notes on how things are going. Arch cleverness–or bungling–or malpractice. Dunno. Seems intentional, to improve the chances no one will care what happens under Bayh-Dole. A bit of regulatory regolith from Mars.
When a report on utilization is received by a federal agency, according to the regulation here, it is not to be disclosed by the agencies “to persons outside government” or “outside the agency,” depending on which sentence you happen to read, except, well, to the Secretary of NIST.
And what are we to make of the wording regarding “confidential markings”? The usage implies that there will be confidential markings, but also that any regulation requiring marking or other assertion of the privileged or confidential nature of the information in any given report doesn’t actually matter. This indeed may be true for deciding whether information received by a federal agency is indeed confidential and therefore (if other conditions are met) also exempt from FOIA.
Whatever the law might be, the rule here is to ignore both Bayh-Dole and FOIA. It doesn’t matter if information fails the FOIA exemption at 5 USC 552(b)(4). The regulation implementing Bayh-Dole expands the FOIA exemption. It doesn’t matter if the provider of the information does not consider the information to be confidential or fails to mark the information as confidential. Bayh-Dole declares the information confidential anyway.
Irony time. The advocates for Bayh-Dole made a huge deal out of the idea that the federal government should have a “uniform” patent policy for research with universities. They obfuscated the fact that there was a uniform patent policy–based on the one Kennedy announced in 1963–and made even more express by the revived Institutional Patent Agreement (IPA) program from 1968-78. That program was drafted by the same folks who drafted Bayh-Dole–a program that on review showed that universities were ignoring all the public interest apparatus in the IPA and licensing everything exclusively anyway, and even then, with commercialization rates no better than those of the federal agencies, which wasn’t even trying. So HEW shut down its IPA program and the Senate blocked efforts to sneak a template IPA into use across all federal agencies. But here, at 37 CFR 401.8, Bayh-Dole goes out of its way to create a totally non-uniform approach to the treatment of information that would document whether Bayh-Dole is doing what it was claimed to be able to do.
And now the standard patent rights clause. Let’s see how things change. In the standard patent rights clause, 37 CFR 401.14(a)(h), federal agencies are authorized to request
information regarding the status of development, date of first commercial sale or use, gross royalties received by the contractor, and such other data and information as the agency may reasonably specify.
That is, federal agencies can ask for whatever they reasonably want, but they don’t have to ask for anything. This first bit is there to indicate that certain things, at least, are reasonable to request–status, date of first sale, royalties received. But a reading of Bayh-Dole–35 USC 202(c)(5)–does not make any of these things all that reasonable to request. 202(c)(5) specifies information on “utilization and efforts at obtaining utilization.” That’s the information that the standard patent rights clause is to secure a right for federal agencies to require. Gross royalties has nothing to do with it. Nor, arguably, does date of first commercial sale, or even the status of development. The scope of the statutory requirement is use or efforts to obtain use. “We are using” or “Our licensee(s) are using” or “We are working on use” or “Our licensee(s) are working on use”–and if an agency wants to know more about the use or efforts, what is the basis in Bayh-Dole for that information to be required by the patent rights clause?
We will get at what information Bayh-Dole ought to have required, but inexplicably doesn’t. For now, let’s finish with the implementing regulations. Not only is the information in that can be “reasonably” included in broader than what Bayh-Dole specifies, but federal agencies are required by the standard patent rights clause to agree not to disclose this information, but with a strange qualification:
As required by 35 U.S.C. 202(c)(5), the agency agrees it will not disclose such information to persons outside the government without permission of the contractor.
The strange qualification is the citation to 202(c)(5). If 202(c)(5) actually specifies that agencies won’t disclose such information, then there is no need for the agency to agree not to disclose it. The agency would have no discretion in the matter, and the permission of the contractor would not change things. Further, 202(c)(5) has nothing that requires an agency to agree not to disclose information–the provision to be used pertains to the right of the agency to require reporting. The provisio on that right is that information received is to be treated as confidential. Nothing in the provisio says that federal agencies are to agree to treat the information as confidential or are to agree not to disclose the information–the provisio states a general requirement on agency treatment of the information. I have argued that this general requirement, made by an amendment that left the prior language in place, fails to meet the requirements of FOIA for exempting information from disclosure and does not even evidence a clear intent on the part of Congress to declare use information necessarily secret.
We are left with, then, a problem with “as required by 35 USC 202(c)(5).” It’s that “as” again. The “as” does not mean “35 UCS 202(c)(5) requires the agency not to disclose invention use information.” Clearly, 35 USC 202(c)(5) does not state such a requirement. Nor does the “as” mean “35 USC 202(c)(5) requires the agency to agree that invention use information is confidential.” It would appear that the “as” means something more along the line of “to the extent that.” I will drag it out, like pulling a worm out of the ground so you can see the whole darned thing:
To the extent that 35 USC 202(c)(5) requires the federal agency to treat information as commercial and financial and privileged and confidential and/or to the extent that 35 USC 202(c)(5) requires the federal agency not to disclose such information and/or to the extent that 35 USC 202(c)(5) requires the federal agency to agree not to disclose such information without the consent of the contractor, the federal agency agrees it will not disclose such information.
And if 35 USC 202(c)(5) does not end up requiring the federal agency to treat information as commercial and financial unless that information is indeed commercial and financial, then the federal agency hasn’t agreed to much of anything. If 35 USC 202(c)(5) does not require the federal agency not to disclose information unless it is confidential to the submitter, then it’s only the stuff that’s submitted as confidential that is subject to the agency’s agreement not to disclose. And if 35 USC 202(c)(5) does not actually require the agency to agree to anything on the matter with a contractor–and it surely doesn’t on its face–then there’s nothing here for the federal agency to agree to, since no agreement whatsoever is required by 35 USC 202(c)(5).
Is this a muddle or what? It is entirely clear that a contractor might reasonably assume that federal agencies cannot release any information contained in an invention use report. That much is clear. But whether the clever house of cards has statutory authority is another thing.
Thus, there’s a federal agreement–which agencies are required to use–that includes an assurance to contractors as a matter of federal agreement–that’s not in Bayh-Dole–that an agency won’t disclose utilization report information “outside the government” or “outside the agency” at least not “without the contractor’s permission.”
This is different from the requirement stated in Bayh-Dole, which states that agencies will treat information as confidential and as if it were exempt from FOIA. The agreement also stipulates that the contractor may authorize public release. 35 USC 202(c)(5) makes it a condition of exercising a right to receive invention use reports that the information received will be treated as exempt from FOIA even when that information does not meet the requirements for exemption to FOIA. Bayh-Dole does not make utilization report information “privileged and confidential”–it requires federal agencies to treat such information as if it were, for the specific purpose of denying public disclosure requests.
We have beaten the horse. It was dead. And has remained dead. Good ol’ WTF Bayh-Dole. We will turn again to FOIA and consider the nature of confidentiality under (b)(4), since this is apparently the point on which 35 USC 202(c)(5) as modified turns. In that effort, though, we can now consider what information Bayh-Dole should require, and speculate on why Bayh-Dole does not require it. Then we can turn to why it is that Bayh-Dole makes use of inventions a federal secret when the law aims to promote the use of inventions made with public support with the assistance of universities and other nonprofits set up with public missions to promote the use of inventions so that such use can be “established” and the benefits of that use are “available to the public on reasonable terms.”
This is a study in ten parts. Here are the links.