How would one know whether a project is a big project, or a subject invention is a big subject invention, or a commercial product just another instance of that big subject invention, with a full license already granted to the federal government? Easy. Three classes of document.
First, the documents that describe the project established by the university. The request for proposals. The research proposal submitted and approved. The articles written by the investigators and by university officials regarding the project. The reports to the Government. The stated goals of the university’s invention licensing program. These together provide a written expression of the scope of the project.
Second, the patent applications and issued patents. If the claims are drafted to cover therapeutic drugs, then it’s clear that the university intends that the project will move to development of therapeutic drugs–the scope of the subject invention includes commercial products, however these might be developed. Separate accounting doesn’t matter. The time relationship is not an important determinant.
Third, the licensing agreement(s). If there is an instrument labeled “Exclusive Patent License” but the document itself grants all substantial rights in the invention, then the instrument assigns the invention, and Bayh-Dole requires that its ownership provisions follow that assignment–and the ownership provision in Bayh-Dole carries with it, in the same provision, the Government’s license to practice and have practiced the subject invention. It does not matter what downstream patents get filed on the subject invention–so long as there is a common project that includes creating a commercial product and a formal line of patenting and assigning of the invention in performance of that project. It does not matter that money was spent by an assignee not the university; it does not matter that the assignee did its work later, adding to what the university had done–the project is still to create a commercial product, a prescription drug, a “usable technology” and the commercial development “more comprehensively” accomplishes the objective of the project.
One might avoid this outcome in any number of ways. A university could choose not operate a licensing office dedicated to commercialization of inventions and therefore not add such productization as a formal, planned and committed purpose, to every proposed project. A university could choose not to file patent applications with claims directed at commercial uses–if a patent application took up claims pertaining only to scientific uses, one might expect that the scope of the subject invention was indeed something narrow and closely related projects might apply that new science outside the scope of the definition of subject invention. Or a university could license non-exclusively, so that a subject invention is not assigned to a “commercialization partner”–read to mean a “non-federal sponsor of a portion of the project that has also received federal support.”
But a university has to choose to avoid the outcome that a given project was end-to-end, from discovery to commercial product, and so the subject invention includes not only the science but also the product, and so any patent rights in that big subject invention by the university or any assignee are also exhausted in that license to the Government.
The result: for subject inventions that are set up from the start to become commercial products, the project in play is end-to-end, and no one in the chain of that project, whether the university or any assignee–even assignees masquerading as exclusive licensees–can assert subsequent patent rights against the Government for practicing or having practiced the big subject invention.
It does not matter that a pharmaceutical company has added additional inventions in order to make a commercial product under an exclusive patent license on a subject invention. The government license to practice and have practiced follows the university’s assignment of the subject invention. The project was, to start, as big as discovery to product. The Government owes a pharmaceutical company nothing by way of compensation if the company obtains its interest in a subject invention in this manner.
We can then return to Mine Safety Appliances. In that case, the Navy contracts with USC to conduct research concerning the effects of acceleration on the human body. USC represented further that (emphasis provided by the court in quoting a USC document):
“Physiological studies of the effects of abrupt acceleration on the body and the aircraft design changes and personal protective gear necessary to decrease the hazards of crash landings will be undertaken”
One result of the research–which USC sought to claim was outside the project–was a crash helmet that took advantage of the data obtained on the effects of acceleration. USC sued the Government to recover royalties from the Government’s use of the crash helmet under 28 USC 1498. Here’s then how the court reasoned about the nature of the project that had been proposed, starting with the Government’s license
That provision, in granting the United States a royalty-free non-exclusive license to practice “each invention, improvement and discovery * * * conceived or first actually reduced to practice (i) in the performance of this contract”, does not mean that, before a license can ensue, each and every component of the invention must be found to have occurred or been discovered as an integral part of the contract performance.
That is, the license is to the invention as a whole, not just one component of the invention.
Nor does the grant mean that the contractor must have been engaged to make the whole of the particular discovery or to study all aspects of the problem.
The university does not have to make all components of the invention on its own. It can have help; others may participate.
At least in those instances in which the invention was conceived or practiced during the existence of the contract, it is enough that an important factor in the invention was itself within the contractual scope, or resulted directly from the course of contract performance.
All that’s needed is one “important factor” be within the scope of the federal contract. The project is big, the federal contract merely has to be sufficiently substantive that it supports one “important factor” of the invention. Other sources of funding might add other factors.
That is the import, as we understand it, of the general phrase “in the performance of this contract.”
And that, too, is the burden of the Bayh-Dole implementing regulations at 37 CFR 401–the project that is supported in some way with federal money is not necessarily restricted to only what the federal money pays directly for. “In performance of the contract” is wording also used by Bayh-Dole. The import is, “working on the big project with help from a federal funding source to accomplish at least one important element for one or more inventions that may require additional work to complete or make useful.”
It is immaterial, therefore, whether or not the practical development of impact head gear was, in and of itself, within the Navy agreement. That was only one aspect, though an important one, of the invention.
What matters is the full invention. Practical development is an important element, but not the only element, and not entirely separated from the federally funded part of the project.
The physiological, biochemical, and anatomical research on impact-acceleration and the study of energy-absorbing materials — which had to precede or accompany the practical head-gear applications — were also necessary and important components; and such research was an integral part of the contract. Without these contract-covered inquiries, the final invention would not have been made.
The invention–the crash helmet–was determined in Mine Safety Appliances, to be licensed to the Government as a necessary part of a invention implicated by the federal contract, even though the Government contract did not expressly procure the development of a crash helmet from the data on the effect of acceleration on the human body–especially the accelerations involved in, say, a crash.
If one proposes a big project to win government funding, one must live not only with that big project, but also with the big scope of subject invention that comes with a big project, and with a broad–very, very broad–license granted to the government that includes not only patents on other aspects of the invention, even if “outside” accounting for the use of federal money but also inventions made by any assignee of the subject invention–a big invention.
We might say, then, by way of a simplifying summary, that when universities act to create end-to-end projects in which it is a formally stated goal to commercialize research results, and when they act to own inventions themselves and to file patent applications on these inventions that make clear they have intended commercial products as the objectives of these projects, and when they further act to assign these inventions to a private sponsor of the development portion of the end-to-end project, the universities and companies involved have chosen to develop these commercial products on behalf of the Government. Whatever rights they retain for any private market is beside the point of Bayh-Dole.
The effect of Bayh-Dole is to produce commercial products that the Government may exploit and authorize others to exploit, without further formalities or compensation. That is the fundamental public covenant in Bayh-Dole. Even if those drafting Bayh-Dole sought to evade this public covenant any way they could–and they were very clever at the political rhetoric and utterly inept at the drafting–what Bayh-Dole ends up doing is not at all what they hoped. The best they could do was try to obfuscate the law, replace it with a proxy faux version that fickle university patent administrators would represent to everyone as the wildly successful, what-Congress-really-intended-because-we-have-read-their-minds-and-actually-Congress-delegated-to-us-to-think-for-them-on-all-this law.
When a university runs an invention licensing office with a stated goal to commercialize inventions owned by the university, then any research project undertaken at that university in which the university claims ownership of inventions is in fact, formally, an end-to-end project that includes in its planned and committed activities the development of commercial products,
When a university accepts federal funding for a portion of such a project, the scope of subject invention extends to any invention made in the project, without regard for the source of funding or the time relationship involved, so that any “commercialization partner” is working on that same project, not on a different project, even though closely related,
When a university claiming ownership files patent applications with claims drafted to cover commercial products, then the university makes clear that the scope of the subject invention necessarily includes those products–they are part of the conception of the subject invention,
When a university assigns its subject inventions (even under the guise of an exclusive patent license) to a commercialization partner, Bayh-Dole’s patent rights clause follows that assignment, and thus the scope of the project follows that assignment, and thus any further inventing that the commercialization partner does is implicated as part of the same federally funded project, and the commercialization partner, as assignee, grants the same license to the Government to practice and have practice the subject invention, regardless of these subsequent inventions and any patents filed that cover them,
When a university and company act in these ways, they have chosen to create “usable technology” which the federal government may practice (make, use, and sell) and which the federal government may authorize others to practice (have made, have used, have sold) for any purpose for which the federal government is authorized to act.
And to boil off all the details:
The university that operates systematic invention licensing program that assigns inventions made in a project receiving federal support ensures that the government has free access to any commercial product resulting from that project and such assignment of invention, regardless of subsequent patent rights claimed by the university or any assignee of the invention.
The university, by choosing to own such inventions and to combine that ownership with a systematic invention licensing operation that exploits assignments of these inventions, creates big end-to-end projects and necessarily expands the scope of subject inventions to include those within the scope of such big projects, and therefore expands the government licenses in those inventions to include all subsequent rights in the components of such subject inventions, including any manifestations as commercial products.
They have chosen to do this. They are patriots! And I called them fickle!