Ten Points Regarding Bayh-Dole and Its Fantasizers

Here’s some things to consider about Bayh-Dole and university patent administration:

1. Bayh-Dole is part of federal patent law. Bayh-Dole defines a new category of patentable invention, the subject invention. Bayh-Dole defines a public covenant for subject inventions that runs with patent ownership, including a working requirement, restrictions on exclusive licensing, and the possibility for compulsory licensing. The patent property rights for a subject invention are unlike those of an ordinary patent. (See 35 USC 200; 35 USC 201(e))

2. Under Bayh-Dole, the government has a broad, unrestricted non-exclusive license to make, use, and sell any subject invention, and authorize others to do so to, for any government purpose. (35 USC 202(c)(4))

3. Bayh-Dole applies to federal agencies, not universities. Bayh-Dole requires federal agencies to use a standard patent rights clause in funding agreements. It is the patent rights clause that universities agree to comply with. The standard patent rights clause contains provisions not in Bayh-Dole. (35 USC 202(c); 35 USC 206; 37 CFR 401; e.g., 37 CFR 401.14(a)(e), (f), (g)).

4. Bayh-Dole does not require or mandate university ownership of inventions made in work supported by the federal government. Bayh-Dole does not give universities any special privilege or right to acquire such inventions. The standard patent rights clause arguably precludes universities from gaining an interest in any such invention as a condition of participation in federally supported work. (35 USC 202(a); see Stanford v Roche; 37 CFR 401.14(a)(f)(2))

5. The standard of success in Bayh-Dole is “practical application”–establish the use of each subject invention with benefits available to the public on reasonable terms. The standard is not commercialization; there is no mandate in Bayh-Dole to commercialize inventions or to grant exclusive licenses. (35 USC 201(f))

6. Bayh-Dole requires federal agencies to agree to make reports of subject invention use a government secret, excluded from FOIA disclosure. There is no public evidence that Bayh-Dole has achieved anything like the success claimed for it. (35 USC 202(c)(5); 37 CFR 401.14(a)(h))

7. Supporters of Bayh-Dole represent the law as endorsing institutional ownership and exploitation of patent monopolies on subject inventions. Bayh-Dole does not do that. Studies have shown this approach is among the least effective approach to development of inventions into commercial products. The most effective is when a company with prior experience owns the invention. Bayh-Dole appears to be 10x to 80x less effective than previous federal patent practice. (See the Harbridge House report)

8. There are four standard patent rights clauses created under Bayh-Dole. One for small businesses, one for nonprofits, one for naval nuclear programs, and one for inventors. The most restrictive is the one for naval nuclear programs, then nonprofits, then small businesses. The least restrictive clause is directed at inventors. University administrators seek to prevent the operation of the most favorable patent rights clause, the one for inventors. (37 CFR 401.14(a) but for (a)(k), 37 CFR 401.14(a), 37 CFR 401.14(b), 37 CFR 401.9)

9. The restrictions on nonprofits include a requirement that any assignment of rights in a subject invention in the US must include the nonprofit patent rights clause. Assignment includes an exclusive license to the rights to make, use, and sell. Other restrictions include sharing royalties with inventions, using income only for cost recovery for subject inventions, and using any remainder for scientific research or education. Any nonprofit exclusive license of a subject invention (such as, to a company) that also makes assignment of the invention must include these restrictions specific to nonprofit organizations. No company with even half a brain would accept such an assignment in the form of an exclusive license, were this provision enforced. (37 CFR 401.14(a)(k))

10. Bayh-Dole has never been fully implemented. Universities routine ignore the requirements of the nonprofit standard patent rights clause. Federal agencies waive requirements, ignore them, or decline to enforce them. Federal agencies don’t use the rights obtained by the federal government under the standard invention rights clause. In all, almost nothing substantive under Bayh-Dole has been implemented. The activity ascribed to Bayh-Dole is not authorized by Bayh-Dole, does not arise as a result of implementing Bayh-Dole. (See the descriptions of the faux Bayh-Dole at AUTM, COGR, APLU, AAU, BIO, NIH, Nolo Press, almost any American university technology transfer office, talks by Joe Allen, and the amicus brief by Sen Bayh–all of it administrative and political fantasy dressed up as expert regulatory guidance).


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