There Is No Bayh-Dole Compliance for Universities

There is no Bayh-Dole compliance for universities. I know. This goes against everything you’ve heard. But really, let’s get real. Five points.

  1. Bayh-Dole applies to federal agencies and to the scope of patent property rights, not to universities. Bayh-Dole applies to federal agencies and changes property rights in patents on inventions made with federal support, authorizes federal agencies to grant exclusive licenses, and dictates how federal agencies may contract for rights in patentable inventions. There is nothing in Bayh-Dole for universities to comply with. The law does not apply to universities. It boggles that university administrators can’t grasp this point.
  2. It’s the patent rights clause in each funding agreement that matters. The requirements of Bayh-Dole are conveyed to universities in the form of a nonprofit patent rights clause that is made part of each federal funding contract. Federal agencies are required to use a standard patent rights clause unless they can justify a variation. Universities must comply with the patent rights clause in each agreement. Furthermore, there are requirements in the patent rights clause that are not in Bayh-Dole (see for instance (e), (f), and (g) of the standard patent rights clause at 37 CFR 401.14(a)). University compliance is a matter of federal contract formed from regulations, not with a federal statute. One has to read the federal contract, not the law. It boggles that even law professors cannot fathom this bit of basic contracting diligence.
  3. Federal agencies don’t enforce the key parts of the patent rights clauses, have the right to waive most everything else, and so what? While Bayh-Dole requires federal agencies to use a standard patent rights clause in funding agreements for research or development, Bayh-Dole does not require federal agencies to enforce the patent rights clause. The GAO in 1998 reported as much. In fact, Bayh-Dole walks back the requirements for most provisions in the standard patent rights clause, and the implementing regulations and standard nonprofit patent rights clause walks back these requirements even more. Other than loss of ownership of inventions for not reporting subject inventions (walk back: only if the federal agency requests ownership within 60 days of the “discovery” of a failure to report), there is no other material consequence for failing to comply with a patent rights clause. Thus, for almost all substantive elements of the patent rights clause, there’s a waiver, a walk-back, or no enforcement, which makes compliance talk mostly about maintaining appearances.
  4. And universities routinely ignore patent right clause compliance and federal agencies routinely ignore university non-compliance. Universities refuse to comply with the (f)(2) written agreement requirement–central to making all inventions “subject inventions” without forcing university ownership. Universities routinely assign inventions without federal agency approval under the cover of labeling the subject invention assignment an “exclusive patent license.” But the standard patent rights clause is specific to subject inventions; and requires nonprofits to pass through the nonprofit patent rights clause when they do assign, and universities often don’t do that either. Universities routinely ignore the requirements for the use of royalty and other income arising from the exploitation of subject inventions. Universities routinely ignore small business licensing preferences, making no effort to attract small business licensees when a large business licensee is in hand and substituting their own startups rather than attempting to attract existing small businesses. No matter–federal agencies don’t bother checking up on these things. Given how much universities refuse to comply with, their “compliance” talk is empty.
  5. Federal agencies routinely ignore the rights provided to them under the standard patent rights clause. Federal agencies make no use of the invention disclosure or invention use reporting requirements. They do not protect the public for nonuse or unreasonable use by marching-in to carry forward a public purpose. They do not practice and have practiced subject inventions. They see no benefit in the standard patent rights clause. A university can jitter away about the prospect of march-in, but march-in never happens. Compliance, if and when a federal agency insists on it, is for compliance’s sake, for appearances. No one cares. Inventions in university research are that inconsequential to government purposes.

In short, federal agencies and university administrators don’t care about Bayh-Dole compliance beyond making a show of reporting inventions, “electing to retain title” in them, and putting a federal funding notice in patent applications. None of these “compliance” things have an ounce of anything to do with making inventions available for public benefit. They are administrative waste effort, put forward as virtue. If putting a meaningless statement in patent applications about federal support helps inventions get used, we ought to put some such statement in even more patent applications! But, sadly, federal funding statements in patent applications have no beneficial purpose. They are make-work when it comes to innovation. Making a big deal out of “Bayh-Dole” compliance is just another way to waste money on administrators and consultants to do their work for them.

This entry was posted in Bayh-Dole and tagged , . Bookmark the permalink.