University administrators insist that they, unlike their corporate counterparts, can expand their institutional claim on inventions to be anything that’s invented, and faculty must agree to this claim as a condition of employment. That is, administrators claim the right to fire faculty members who do not accept this broad unconditional, compulsory, institutional invention ownership claim. The premise of the claim is that because the university has an invention licensing office, then any invention is in the foreseeable direction of the university’s business, couched in terms such as “public service” and “economic development.” If companies made this same move, then there would be no “free” inventions–all inventions would be gobbled up by the company on the premise that in addition to whatever other business it had, it also had a business trying to make money from the licensing or sale of inventions. In some states–California and Washington among them–if businesses made this same move, it would be illegal, as these states have laws that restrict what an employer can claim in an employment agreement. Not to be deterred, administrators at the University of California and at the University of Washington recite these laws in their patent policy documents–even while thumbing their noses at them.
If all a business needs to do is to proclaim that its business includes trying to profit from any invention any employee makes–whether engineer or janitor–then laws aiming to protect inventor rights are worthless. But just because university administrators up and announce that “technology transfer” or “economic development” is a new fourth mission of the university does not change a university’s charter or its non-profit registration materials–and does not change, therefore, the university’s formally stated “business.” Rather, if a university is operated with a “technology transfer” program that is formalized as regular business, then the tax-exempt status of the university should be called into question. The claim to all inventions arising from any employee, and the tie of that claim to systematic profit-making efforts justifies revoking a university’s tax-exempt status for all budgetary activity implicated in the claim–all salary, all research funding, all facilities and equipment financing. It is absurd that the IRS gets all fussy about whether a university can have vending machines operated by for-profit companies in its buildings financed with tax-exempt bonds but doesn’t give a rat’s ass that the same university can claim all employee inventions with the purpose of entering into monopoly-sharing deals with companies to make as much money as it can.
The reality is that compulsory, comprehensive institutional ownership of faculty inventions has turned out to be a really bad idea. It’s such a bad idea that university licensing operations won’t release the basic data, and instead try to deceive the public with a continuous refrain about success and making progress. The University of Utah and University of Washington were both notorious for making claims designed to deceive the public, the faculty, and their state legislators. The University of Washington claimed its “Center for Commercialization” was a rousing success right up until it forced out the apparently wildly successful leader of the “Center” and re-organized it out of existence. Other than a handful of “big hit” deals–which likely would have come about despite the university’s administrators buzzing about–most institutionally claimed inventions are killed by the very process that is touted to help them. Death by administrative process.
Universities run a business in insisting that inventions get delivered as pre-term as possible, apply what are depicted as heroic measures to keep the inventions alive, and yet 199 out of 200 of these inventions dies–the “killing” gets spread out over a period of years, though the death is inevitable the moment the university administrators demand ownership of “early-stage” inventions. What the university administrators cannot accept is that they run abortion clinics for inventions even while insisting that they are doing the opposite.
University compulsory, comprehensive invention ownership policies have done nothing good for innovation or economic development. Even when AUTM uses a stupidly unfounded “economic model” to calculate the impact of their licensing work, every bloated “big number” measure they come up with ends up being a rounding error in the greater economy. Would voluntary, selective invention ownership policies do any better? Yes, of course they would, if only because universities could stop wasting hundreds of millions of dollars a year on invention abortion services.
University administrators, however, argue that they must expand the scope of the assignment obligation for inventions to comply with Bayh-Dole. This, too, is unfounded. Bayh-Dole applies only after a university has obtained ownership. There is absolutely no obligation under Bayh-Dole for a federal agency to require a contractor to obtain ownership of inventions, just as there is no obligation under Bayh-Dole for a federal agency to obtain ownership of inventions as deliverable. Even when a contractor willfully screws up and doesn’t report inventions or doesn’t pursue patent applications, or gives up on patent applications, Bayh-Dole does not require the federal government to take title–it’s optional with each agency.
And even if universities implemented the (f)(2) written agreement requirement in the standard patent rights clause–which they don’t, and which isn’t authorized by Bayh-Dole anyway–all the (f)(2) clause agreement would do is turn inventions into subject inventions of the inventor-contractor and obligate the inventor-contractor to sign papers to establish the government’s rights–of which, under Bayh-Dole, there is essentially only the royalty-free license to the government and march-in once the inventor-contractor elects to retain title and files a patent application. And of course, march-in was designed not to operate and federal agencies almost never exploit their licenses to practice and have practiced.
There is no obligation in Bayh-Dole for inventors to assign their inventions to their employers. The Supreme Court made that clear in Stanford v Roche. There can be, then, no obligation in the implementing regulations or a standard patent rights clause that inventors must assign to their employers, or that employers must obtain assignments from all inventors up-front. At best, there can be only what the IPA required–that if a university is to obtain ownership of an invention made with federal support, it must have in place a patent agreement with each inventor and obtain assignment of each invention before electing to retain title to such invention. This requirement would come under the heading of “no duh really?”
Of course, even a patent agreement might only be the negotiated arrangement under which an inventor voluntarily offers to assign an invention to the university. There can be no obligation under Bayh-Dole that universities or any other contractors must require all inventions made with federal support to be assigned to them, regardless of whether they want them. It’s just not there in Bayh-Dole. It cannot be there in the standard patent rights clause. And if and when NIST decides to put it there anyway as they have proposed, to ensure that university invention-abortion procedures are uniformly efficient throughout the country, it will be an illegitimate clause, in contempt of the Supreme Court’s ruling in Stanford v Roche, another regulation in the service of speculative monopoly mining from public research support. It should take an act of Congress to turn Bayh-Dole into a vesting statute, if not a Constitutional amendment giving the federal government the right to reserve for the hosts of federally funded research the exclusive right for limited times to the inventions and discoveries of whoever has the misfortune to get mixed up with such hosts. Lord help us, that won’t happen.
The meaning of “conceived or first actually reduced to practice” in Bayh-Dole now should be clear–at least as clear as an ambiguously drafted definition can be, especially since the Supreme Court eliminated some of the ambiguity that university administrators thrived upon. For an invention to be a subject invention, it has to be patentable, has to become owned by a contractor, and either the conception or first actual reduction to practice of that invention has to be specified as a deliverable in a project that is supported by federal funds, or there has to be a demonstration that the project was “diminished or distracted” in some way by the conceiving or actually reducing to practice of the invention.
The implementing regulations for Bayh-Dole are clear–an application of an discovery, even though closely related, is not within the scope of the standard patent rights clause, if the objective of the project is to discover, not also to apply the discovery in some practical way. Similarly, if a project does not stipulate that an objective is to first actually reduce to practice an invention that a contractor owns, then again, the invention does not come within the scope of “subject invention.”
In the Kennedy executive branch patent policy, the definition of “made” including “conception or first actual reduction to practice” is restricted to “the course of or under the contract.” That is, the invention arose because it was specified to be done (“under”) or because to do what was specified to be done, those involved made the invention (“the course”). This part covers “conception.” It’s narrow. To get there, one looks at the statement of work. Then one looks to see whether a given invention was specified (“solve this otherwise unsolvable, non-obvious, everyone does it differently problem”) or whether for whatever was specified, the invention was made in “the course” of doing what was specified.
Now deal with “first actual reduction to practice.” The Supreme Court made clear that the scope of this term could not be just any invention “first actually reduced to practice” in the performance of federally supported research. If that had been the case, then a university researcher could propose to build something invented by someone entirely unconnected to the university, and as long as the researcher was “first” to “actually reduce” the invention “to practice,” then, why, the invention would become a subject invention. Except it couldn’t, because there would be no way for the university to own that invention unless it bargained for it. The mere reduction to practice would have absolutely nothing to do with it. There would be no patent rights available to someone for reducing to practice something that that someone had not conceived. Nothing patentable as a deliverable. No subject invention. Nothing.
The case is the same for an invention that an inventor has assigned to a company, and then the inventor is hired by a university. The inventor then reduces to practice what was assigned to a company. Whatever the problems in doing that might be with regard to infringement by the university, there’s no way that the university has a claim to own the invention as a result of the use of university resources to reduce the invention to practice. The inventor has no rights to assign to the university in the invention. If the university aims to be first to file on the invention, there’s the problem of derivation to overcome. Doesn’t work. It’s nonsense thinking. understandable as institutional administrative avarice repeating without evidence or reason that institutional ownership is necessarily for the greater good of society.
Consider the conditions operating with the Kennedy patent policy. If the government funds a project, the default is that the government will own any invention deliverables and make these available to the public, with or without patent rights. The issues are ensuring the integrity of claims in the invention and protection of domestic markets from unwanted foreign competition. Thus, a patent can be used to manage quality–so the public is not harmed by poor quality implementations of an invention–and to manage imports. The government was not in the business of excluding its own citizens from using the discoveries that its money had produced for its benefit. The government also was not in the business of creating private monopolies that would do the excluding by handing out exclusive licenses to favored companies and taking a share of the action.
The most awful part of Bayh-Dole has to do with authorizing the federal government to get into the business of dealing in private monopolies on inventions made with public support. It’s the federal exclusive licensing to the point of assignment that’s the destructive element of Bayh-Dole. It’s not that federal agencies have to do this–but the federal agencies that do, such as the NIH, have created horrible market conditions: not just drug prices 20x what the market might otherwise be, but also making next to impossible standards formation, cumulative technology platforms, and an active independent trade in experimental uses and DIY implementations.
In the Kennedy framework, if the government takes ownership, everyone has access, including the inventors and other researchers. Now consider: if the government has ownership of an invention (that is, has acquired the right to decide whether to seek a patent), and now sponsors work to first reduce this invention to practice, the “first actually reduced to practice” is in reference to an invention that the government owns. If one is going to work on a government-owned invention, then whatever gets done is for the benefit of the government, which means for the benefit of public access to the invention.
The meaning of the definition of subject invention runs a different way entirely. First, look at a patentable invention owned by a contractor. Now ask whether the conception of the invention is part of the “planned and committed” activities of the funding agreement. If not, look to see whether conception of the invention “diminished” or “distracted” from the “planned and committed” work set out by the funding agreement. This part is actually rather difficult–the implementing regulations at 37 CFR 401.1 make it clear that even closely related inventions, such as applications of basic science discoveries, are not subject inventions if the funding agreement did not specify work to apply discoveries made in the federally funded project. The same analysis can then be done for actual reduction to practice. This part is actually easier. If the funding agreement does not specify that a given invention will be implemented and tested to show that it performs in each element as anticipated by its inventor(s), and whatever implementation that was done did not “diminish or distract” from the specified work, then the invention also fails this test.
The main point is–first there must be a patentable invention, and it must be owned by a contractor (such as the university). Then look to see whether either the conception or actual reduction to practice was specified by a federal funding agreement or specified work on a federal funding agreement was not completed because people had diverted their time or budget to messing around with their invention. Either way, first there must be a patentable invention.
You can see, however, that the University of Missouri by 1996 had not only adopted the goofy misreading of Bayh-Dole but also introduced this strange concept of inventions that are only “conceived” formally into their patent policy (and made a hash of it in the process). The effect of this goofiness was to expand the scope of the institutional claim on inventions–but only within the restricted meaning of “general scope of duties to the University” as set forth by the policy definition as conditions (1) and (2). It’s just that university administrators ignore their own policy as written and instead insist that the university owns anything that administrators decide to label an “invention.” Thus, we get language such as this (the university representing its policy in a court case):
Under the Collected Rules, if a faculty member believes that an invention he or she has made falls outside the scope of his duties or services, he is required to nonetheless disclose the invention to the University, assign it and ask the University to waive ownership of the invention.
This is untrue and deceptive. Nothing in the Collected Rules requires faculty inventors to assign any invention as a condition of disclosing it. Further, inventors are assured that they are entitled to all rights in inventions that the university does not have a right to claim by policy. And of course the university’s policy does not claim all inventions within the “scope of duties or services”–the Collected Rules goes out of its way to define “general scope of duties to the University” to mean only two conditions–(1) relevant to the general field of an assigned inquiry; and (2) made or developed in a substantial degree with university facilities, financing, time, or non-public university information. The portion of Missouri patent policy pertaining to waiver has to do with those inventions that otherwise come within the scope of either condition (1) or condition (2). For all other inventions, the university never has a right, by policy, to claim ownership, so there is simply nothing to waive.
Only in deeply incapable backrooms and corridors of university administrations are such policy scams allowed. There’s no justification for it, any more than there is for looting, indentured servitude, and bullying–these behaviors serve the interest of those that loot, dominate, bully. Such abuse of the patent policy does not promote innovation or public use of research, is not for any “greater good.” Yes, the university does make money–just as a protection racket makes money, as a fraud scheme makes money. In universities, apparently, deception in IP policy is the norm.