More Contempt of the Supreme Court at the NIH

Here is more misrepresentation of Bayh-Dole from the NIH, the creator of Bayh-Dole, purporting to be advice for inventors:

Under the Bayh-Dole Act, your institution as the grant recipient owns rights to the NIH-funded invention and has the right and obligation to patent under the Bayh-Dole Act.

This is from “Let’s Be Patently Clear About Patents,” published by NIAID. The assertion is flat out wrong. The Supreme Court established in Stanford v Roche in 2011 that Bayh-Dole did not take inventions from inventors, did not give university employers a right to take inventions. Nor is there an obligation for universities to patent inventions under Bayh-Dole unless they do acquire ownership, which they do not have to do. That the NIH permits pages like this to be posted is contempt of court.

More from the web site, talking of Bayh-Dole:

In a nutshell, it states that funding recipients, e.g., grantees, have the right to retain title to inventions made under federally funded research but must comply with regulations (37 CFR 401 et seq. ) to ensure the timely transfer of the technology to the public sector.

We can disagree on the nutshell version of Bayh-Dole. I might say it states that the federal government should allow funding recipients to create patent monopolies to pass to private speculators to exploit public needs for maximum profit, especially in matters of health. But that’s no doubt too starkly true for the NIH to find the courage to post. 

Nothing in 37 CFR 401 concerns “timely transfer of the technology to the public sector.” This is nonsense bureaucrat speak. The implementing regulations create a standard patent rights clause. That patent rights clause is what universities agree to (and then mostly ignore). There, inventors are to be delegated responsibilities that make them parties to the funding agreement. One of those responsibilities is timely reporting of inventions–not timely transfer of inventions. Furthermore, the standard in the patent rights clause is “practical application”–established use of a subject invention with benefits available to the public on reasonable terms. There is no “transfer” or licensing of inventions necessary to achieve practical application. What matters for Bayh-Dole is that benefits from the use of a subject invention are available to the public on reasonable terms.

One might “transfer” an invention to the “public sector” (did they really mean public sector? private sector? non-federal sector? public? isn’t the public sector the government?) by means of licensing, but there’s no requirement in Bayh-Dole that an owner of a subject invention must license the invention. Bayh-Dole sets some requirements for such licensing–obviously Bayh-Dole anticipates there may be licensing and “commercial use”) but there’s no requirement that anyone license except if they fail to meet Bayh-Dole’s policy objectives, such as use or availability–triggering the possibility of “march-in” by a federal agency to require licensing.

If a university doesn’t patent:

However, if it chooses not to, you (the inventor) may be allowed to—with NIH approval—submit a patent application to the United States Patent and Trademark Office  (USPTO). This is called an “Inventor Waiver.” Your technology transfer office will be able to guide you through either procedure (your institution’s proceeding with a patent or your applying for an Inventor Waiver).

This is screwed up, too. First, the university doesn’t have any right to own any invention under Bayh-Dole. Only if the university acquires ownership of an invention does things get murky if the university refuses to file a patent application. So the NIAID guidance here misses the key point for inventors: if they refuse to assign to their host university (and if the university complies with the written agreement requirement at 37 CFR 401.14(a)(f)(2), the inventor would appear to have been granted by the university the right to refuse to assign to the university), then the inventor is also a contractor, and the patent rights clause that the NIH must use is at 37 CFR 401.9. There, the NIH has no right of approval for the filing of a patent application–it must consult with the inventor’s employer, per 35 USC 202(d). That’s to confirm that the inventor does not have any obligation to assign to the employer, which might be the case if the (f)(2) requirement had not been added (since (f)(2) isn’t in Bayh-Dole). Under 37 CFR 401.9, the NIH is to treat the inventor as a small business contractor, but with fewer requirements than small business contractors.

The “Inventor Waiver” nonsense has to do with the university already effing things up by taking assignment of an invention on the premise that it will file a patent application and then backing out of doing so. Then, yes, the question becomes whether the university can rescind the assignment or whether it is stuck with the requirements on assignment in 37 CFR 401.14(a)(k)(1), which requires NIH approval for the university to assign a subject invention back to the inventors.

The simple work-around is for the university to assign the subject invention to an invention-management organization designated by the inventors, one that has agreed to file a patent application, along with the nonprofit’s obligations under the patent rights clause, and then waive any right, title, and interest in the invention, all conditioned on the inventors having an acceptable agreement with the patent management firm. Such a transaction requires no NIH approval, and does not involve this effed up mess called “Inventor Waiver.”

And besides, it’s not an inventor waiver–it is an institutional waiver of claims. But it’s not even that because it is not a waiver. A “waiver” would be declining to exercise a right of assignment that the university has under Bayh-Dole–and universities have no right of assignment (see the Supreme Court in Stanford v Roche) and therefore they have nothing to waive under Bayh-Dole. If they acquire a subject invention and then don’t want to comply with the patenting obligation, they can’t just “waive” the invention–they have to assign it, because they foolishly and no doubt compulsively got assignment without thinking about the consequences.

Whatever claim a university might otherwise have to an invention made with federal support gets displaced by the (f)(2) written agreement requirement, which requires universities to act so that inventors are parties to the funding agreement and therefore are contractors and therefore the inventions they make are “inventions of the contractor” immediately. The contractor that matters is the inventor, not the inventor’s university, even the university acting as employer. If there’s a deal with the university regarding assignment, it cannot be as a condition of the federal award (just as the patent rights clause requires for subcontracting–a university is prohibited from having an interest in inventions made by subcontractors, who also become parties to the funding agreement–the general rule is that one party to a funding agreement may have no interest in the inventions made by other parties to the funding agreement as a condition of their involvement in the funding agreement–not for subcontractors, not for inventors delegated responsibilities under the funding agreement).

If there’s some other deal, outside the funding agreement, under which an inventor has agreed to assign, then the university (if it manages things well), gives itself the opportunity to waive enforcement of the inventor’s promise to assign. It can waive that interest. It can release the inventor from their promise. But that waiver (were it to ever happen!) is entirely outside the scope of the funding agreement–it has to be outside the scope to even exist. Thus, an inventor acting on such a waiver requires no NIH approval. It goes the other way–the NIH is required to use the patent rights clause at 37 CFR 401.9, which among its few requirements obligates the inventor-contractor to report the invention and file a patent application.

Is that patently clear?

As we mentioned above, the Bayh-Dole Act requires that all government-funded inventions be reported to the awarding federal agency; in your case, NIH.

Nope. Only subject inventions. Only inventions that are owned by a contractor. Under Bayh-Dole proper, that’s only inventions that come to be owned by the host institution. There is not even a reporting requirement in Bayh-Dole for inventions that are government-funded but aren’t subject inventions. That’s why, perhaps, the (f)(2) written agreement requirement was added to the standard patent rights clause–to force inventions made in supported projects to be subject inventions (because owned by their inventors, who were made contractors by their universities).

Here’s the funny part:

Your first point of contact should be staff in your institution’s technology transfer office. They can answer questions and also inform you of institution-specific policies and procedures.

You might think this would be the case. But the reality is, although university technology transfer staff will answer your questions, they almost never answer those questions on Bayh-Dole accurately or truthfully. The reality is: they don’t know, they don’t care, they wouldn’t change things if they did know, and they aren’t about to comply with the standard patent rights clause now, and they have arranged university policy to make it appear that they are complying even when they aren’t.


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