Here are the three basic ways to make an invention made with federal support meet the definition of “subject invention.” I said there were two ways when there were really three, but hey, this is the advanced course.
- Accept assignment of the invention when offered
- Make each employee participating in a federally funded project a party to the funding agreement
- Compel each employee to assign each invention
The first approach is the one authorized by Bayh-Dole. Bayh-Dole provides no requirement that federal agencies require universities or other research hosts to obtain assignment or compel assignment of inventions made with federal support. Since Bayh-Dole preempts all other laws on the matter unless they expressly reference Bayh-Dole, there’s no way under Bayh-Dole to change the approach short of amending the law. The Supreme Court in Stanford v Roche was adamant this was the case. Anything that a university might do to compel assignment has nothing to do with a requirement authorized by Bayh-Dole.
The second approach is the clever addition made by the standard patent rights clause authorized by Bayh-Dole. The standard patent rights clause requires universities to make each employee a party to the funding agreement. It does this by requiring universities to require each employee to make a personal written commitment to take three actions under the funding agreement to protect the government’s interest. When a university complies with this requirement, it makes each employee a party to the funding agreement, and by the definitions in Bayh-Dole, therefore also a contractor. When an employee-contractor invents, the employee-contractor owns the invention by federal common law, and thus the invention becomes a subject invention without any assignment to the institution that hosts the research, or anyone else. No university that I know of complies with the standard patent rights clause on this point.
The third approach is the one followed by most universities. It has nothing to do with Bayh-Dole, and it does not comply with the standard patent rights clause requirement. It is rogue with regard to the regulatory framework established by Bayh-Dole. If university administrators claim they must own inventions to comply with Bayh-Dole, they are wrong–and it’s not merely wrong about a technical detail: it’s malpractice, negligence, bad faith, duplicity all rolled up in a fat tortilla of self-interest. If university administrators say that the patent policy they have drafted or the patent agreement they make people sign is necessary for Bayh-Dole compliance, they are also just as wrong–with the same fat tortilla of self-interest–with the added element of willful non-compliance with the patent rights clause. And when university administrators try to force assignment of inventions from faculty, they abuse their authority, violate academic freedom and tenure policies, and turn contracts into memorandum of administrative and legal-sounding bullying.
If a university follows the first approach, it minimizes what becomes a subject invention–only those inventions made with federal support that the university as contractor actually acquires. This is what the Supreme Court set out in its decision in Stanford v Roche. The Court did not bother with the standard patent rights clause. It was asked to answer whether Bayh-Dole vested invention rights in the university as contractor and it said, roughly, “absolutely not.” The Court went out of its way to chide Stanford that a really excellent way to obtain rights to an invention made by an employee is to have a patent agreement in place.
The problem that remains, which the Supreme Court did not address, is what to make of the (f)(2) written agreement requirement in the standard patent rights clause. On the one hand, it is not authorized by Bayh-Dole. Bayh-Dole sets out what must be in the default patent rights clause with regard to ownership, and (f)(2) isn’t there. If Bayh-D0le had wanted to establish a uniform claim by federal agencies to any invention made in the performance under a funding agreement, it could have done so. But Bayh-Dole doesn’t do this, and Bayh-Dole preempts any law that would have previously authorized federal agencies to do so. So (f)(2) is not authorized by law. It’s a clever intervention, but there’s no authority for it. (Oh, yeah, there are “arguments”–but it’s all hack fussiness.)
Subject inventions arise when a contractor comes to own an invention, and it’s simply not acceptable to attempt to turn inventors into contractors by making them in their personal capacity responsible under a funding agreement. They are, by Bayh-Dole’s text, to be free inventive agents, and the government obtains an interest in an invention under Bayh-Dole only when that invention becomes a subject invention and the contractor involved fails to report the invention, elect to retain title, and/or perform patenting work as specified by the standard patent rights clause. But no one apparently thinks this is a good thing, even though that’s the law. University administrators apparently believe they are above the law. Then why do they make such a fuss over compliance? Is it just a distraction technique, or are they truly clueless?
If we allow (f)(2), then every employee who is required–by the university–to make the (f)(2) written agreement becomes a party to the funding agreement and therefore a contractor. When the employee invents, the employee owns the invention personally, as provided by common law. The employee has obligations under the funding agreement, but these obligations have nothing to do with assignment of inventions to the university that hosted the project. The obligations have to do with establishing the government’s rights in the invention–assigning to the government, licensing to the government. Nothing in Bayh-Dole establishes for such a situation any authority or right for federal agencies to simply take ownership of such subject inventions.
Furthermore, federal agencies are required to apply 37 CFR 401.9, creating a special patent rights clause just for these employee-inventors, under which they are treated as small business contractors, but with even fewer requirements than an ordinary small business contractor. Under that reduced patent rights clause, a federal agency can take ownership only if the inventor fails to report the invention, fails to elect to retain title, chooses not to retain title, or fails to file or prosecute patent applications, or maintain an issued patent. No federal agency has any right to take inventions from inventor-contractors unless the inventor agrees or fails to perform.
And just to pack things home, once a university requires the (f)(2) written agreement, and has made its employees parties to the funding agreement, they then have standing within the framework of the funding agreement independent of their status as employees. The university cannot authorize them to act in their personal capacity with regard to inventions that they own–to establish the government’s rights–and at the same time claim that as employees they do not have that authority to act to do so. If the university has not given them authority, personally, to so act, then the university has not complied with (f)(2). Gosh, is this so hard for administrators? Perhaps there should be a law that nothing required of university administrators should involve anything that requires reading or thinking. Bayh-Dole would then violate that law and would have to be repealed or rewritten as a board book, with big colorful pictures and simple words.
We are left with what university administrators actually do, the third approach. Non-compliant with Bayh-Dole, non-compliant with the strange (f)(2) requirement of the patent rights clause, and utterly running against a number of university policy-assured (if not also employment contract-assured) freedoms of research and publication, tenure, and often the express wording of the university’s own patent policy. In the third approach, inventions do become subject inventions–because the university constructs non-compliant patent agreements that insist that the university owns all such inventions.
I know. University patent administrators go “so what?” No one cares about doing it the way the law says, or even the way the cleverly non-statutory federal regulation says. The necessary conclusion is that university patent administrators think what they are doing is a good thing–for the university, for innovation, for the economy, for publicly funded research, for their own careers. And that, apparently, is sufficient reason to ignore law, regulation, policy, history, outcomes, and opportunities.
Do you wonder why university research these days is so inconsequential, so little, for all the tens of billions of dollars annually it consumes? Here’s a start.