The complicated (f)(2) approach
Now consider the complicated approach under (f)(2). The university has to somehow compel inventors to assign all inventions to the university, even though (f)(2) requires the university to require inventors to promise to establish the government’s rights in subject inventions–by assignment to the government or licensing to the government. How can an inventor be required by the university to exercise this power if the university has a second agreement under which the inventor is required to give up this power? It can be done, but it takes hand-waving and administrative farting and legal bullying and defying other parts of university policy. Employees must be hired to invent, must be assigned to the federally supported project, and the invention must be within the scope of what the university has hired the employee to do (whether on the federal project or otherwise). For faculty and volunteers, this is a tough nut to crack.
The effect of the (f)(2) agreement requirement is that a university gives up the power to claim ownership of inventions (or force employees to give up ownership) as a condition of federal funding or access to the federally funded activities of a given project. Compare the same requirement for subcontracts in (g). If there’s going to be compulsion or a prior agreement, it has to be entirely outside the federally funded project–not the funding and not the use of the resources made available by the university as a condition of obtaining the funding. That takes some doing. Of course, by not complying with (f)(2), a university may well undermine any claim that it does have to an invention made with federal support. I’m waiting for one of the big companies sued by a university for infringement of such an invention to contest the university’s ownership based on a failure to comply with its federal funding agreement. That will send university legal counsel scurrying for the cracks in the floorboards.
Small businesses operating under the standard patent rights clause have this same issue, except for them it’s straightforward, since the business sets up its employment agreements without an exception for academic freedom, employees who might invent are often at-will, and with a much clearer understanding of the company’s business and foreseeable future business. A university by contrast assures faculty of tenure and of academic freedom in research and publication, does not assign faculty to research projects–they choose those projects–and does not hire faculty to invent nor disciplines them if they do not invent or even when they blow patent rights in their inventions by publishing them without reporting them or filing patent applications. For a university to gain the benefit of small business contracting for inventions, university administrators have to ignore their own policies and agreements with faculty and substitute others packed into patent policy and research policy. Administrators have demonstrated that they are more than happy to do so. But doing so creates complications as patent policies get stuffed with nonsense statements of university claims, construction of employment agreements within policy, addition of present assignments in policy when such assignments should be in written instruments that employees sign.
The uncomplicated approach to (f)(2) is superior for universities and innovation
In the uncomplicated version, here is how administrators might explain things:
Federal funding agreements include a patent rights clause that requires the university to require research personnel to make a written agreement to protect the federal government’s interest in patentable inventions they make. As a consequence of the written agreement, research personnel become parties to each funding agreement and the inventions they make become subject inventions.
Under that written agreement, inventors participating in projects receiving federal support agree to report promptly each subject invention they make to the designated university technology transfer office.
If inventors desire that the university should manage their subject invention, they may check the appropriate box on the disclosure form and the university’s technology transfer office will review the invention with the inventors and decide whether the university should acquire the invention and file a patent application.
If inventors choose to pursue other alternatives, they must comply with the obligations they have to the federal government under the written agreement that they made, as required by the university as a condition of the federal funding.
Here is why all of this is significant. If a university complies with (f)(2), then it can
- operate with a voluntary invention ownership program,
- use uncomplicated methods to obtain inventions,
- be ready to support inventors where doing so meets university objectives,
- have the advantage of a dual selectivity approach:
inventors decide what inventions they would like a university to manage for patenting, and university administrators decide which of these offered inventions match the university’s resources, purposes, and capabilities.
If, however, a university refuses to comply with (f)(2), then administrators force themselves to adopt a comprehensive, compulsory ownership regime in an effort to compensate for their failure to comply. The effort is *not* to comply with “Bayh-Dole” or with the standard patent rights clause, but rather to make non-compliance less of an issue because the university obtains ownership of all inventions and therefore can “comply” with all the other obligations in the standard patent rights clause that arise when a university does gain ownership of an invention made with federal support and thus turn it into a subject invention.
Since nothing of substance is enforced in Bayh-Dole’s standard patent rights clause once a university gains ownership of an invention, administrators can do most anything they want–sit on inventions, troll industry with patents, assign inventions, create monopolies with monopoly pricing and monopoly royalties–whatever they want. There’s virtually no compliance, no enforcement, no competition from government, no public appeals. The happiness of the long-distance patent broker, playing with other people’s inventions, under the blessed cover that whatever happens is federally mandated, uniformly positive, for the public good, and the best of all possible outcomes.
Of course, the opposite is true: compulsory university ownership of faculty inventions is surely among the worst of all possible outcomes. The rate of public use for this approach is among the lowest of all possible approaches. The damming (and damning) effect on the flow of nascent research findings to cumulative technology platforms is great, and the fixation on all things for “commercialization” leads away from industry and toward opportunistic (and then predatory) speculation in patents.
Non-compliance with (f)(2)
If a university does not comply with the (f)(2) written agreement requirement, then a university depends on its own patent agreements with potential inventors. Here university administrators make all sorts of bluster, including claims in patent policies that inventors have already assigned all future inventions to the university, even when there is no written evidence that any inventor has done so. Even if an inventor has assigned away future rights to inventions, it does not mean that the university has acquired those rights. That’s the outcome of the Stanford v Roche case, in which an inventor assigned invention rights by a future assignment (“hereby assign” future inventions) but the company did not have title–it was enough that the inventor no longer had rights to assign when Stanford came asking for an assignment.
One thing university administrators have no basis to do is to claim that inventors must assign inventions to the university so that the university can “comply” with Bayh-Dole. There is no obligation for inventors to assign any invention to the organization that hosts a federally supported project (at least not until NIST screws things up even more by adding an assignment requirement to the standard patent rights clause–something that Bayh-Dole does not authorize and something the Supreme Court cautioned against, since Bayh-Dole has no protections for inventors or third parties).
If an invention made in the performance of a federal contract is not a “subject invention” then the only part of Bayh-Dole that applies to the invention is that of Bayh-Dole’s statement of policy, which is made part of federal patent law (35 USC 200). There’s nothing for a university to comply with, since the university has failed to comply with 37 CFR 401.14(a)(f)(2). No invention then has become a subject invention. It’s not even clear whether federal agencies have any rights to non-subject inventions, given Bayh-Dole and the wording of the standard patent rights clause. I’d say “not” but then money and power does talk and federal agencies might be ready to talk, regardless.
If an invention is a subject invention, then a contractor–a party to the funding agreement–must have done something to come to own it. For inventors, that’s easy. They own their inventions when they make them. So if they are also parties to the funding agreement, then they are contractors who own inventions made with federal support, and those inventions are subject inventions. So sweet.
The question then becomes whether the contractor who owns an invention will retain that ownership. If the contractor-owner is the inventor, then the matter is controlled by a reduced version of the patent rights clause that applies only to small businesses, not to universities. See 35 USC 202(d) and 37 CFR 401.9. If the contractor-owner is the university that hosted the project in which the invention was made (or a designated agent of the university), then the standard patent rights clause at 37 CFR 401.14(a) applies (unless the funding agency has introduced a different clause as allowed by Bayh-Dole).
The more favorable patent management clause by far is 37 CFR 401.9, the clause that federal agencies must apply when inventor-contractors elect to retain title. Any university worth its salt–and wanting to maximize the prospects for licensing with the least administrative overhead–would aim to have 37 CFR 401.9 in play rather than 37 CFR 401.14(a). But, alas, no. University administrators are not so committed to maximizing prospects as all that. Instead, they are fixated on minimizing the chances that any inventor might have rights in any invention, patentable or otherwise. Why? Lust for power? Affinity for self-preservation? Clueless belief in compliance without bothering to know? Clueless belief that getting ownership from inventors with the least effort is the best way to make loads of money or to transfer technology or to commercialize technology or to serve the public interest in some way by trying to do these things, even if mostly the effort fails and costs more than it produces? Dunno. I expect the answer is somewhere in that unpretty list, though.
If an inventor-contractor owns a subject invention, then the university has plenty of opportunities to help the inventor manage the invention. The university could recommend patent management organizations with which it has royalty-sharing deals and which it has vetted for having resources, industry connections, and capable personnel. The university could offer to pay patenting costs in return for a financial share in any exploitation of the invention–startup, licensing, assignment, free plus consulting–whatever. It should be clear that a university does not have to own an invention to assist in technology transfer and to make money doing so. The simple compliant approach has the least administrative overhead, filters for the most juicy inventions, and provides multiple ways for a university to make money.