Why universities might fail to report subject inventions

James Love asks why universities fail to report subject inventions.

The question might seem rather odd, because in practice Bayh-Dole has been construed to give university administrators incentives to expand the definition of subject invention and so claim anything and everything they can. University administrators viewed Bayh-Dole as giving them an end-run around university research policies. Those policies generally state that research contracts take precedence over patent policy inventor ownership rules–which at the time often favored faculty inventors. Thus, according to these university administrators, Bayh-Dole happily also preempted academic freedom, freedom of research, and freedom of publication–all things otherwise assured by university policy. University administrators did not have to change any policy–they just asserted that federal law required them to take ownership of any inventions with a whiff of federal support. Then they went back and made changes in university policies to bring the policies into compliance with federal law. It was all bogus–incompetence and clever malice all rolled up into one slime ball of self-interest. But that’s what we have. You can see why university administrators are pretty much the only folks in love with Bayh-Dole–oh, along with much of the pharmaceutical industry.

But Love reports that his organization (KEI) is finding numerous instances of non-reporting of what appear to be federally supported inventions made at universities. Here is a KEI “Briefing Note” that provides a bunch of information with regard to Bayh-Dole invention reporting.

So if Bayh-Dole offered incentives for university administrators to expand the definition of subject invention and report everything as a simple way to claim institutional ownership with the apparent power of federal law, why would administrators under report?

Here are some possible reasons why:

1. Invention reports are made by Bayh-Dole (apparently) exempt from FOIA, so only the federal agency can see whether an invention has been withheld from reporting.

If invention disclosures become government secrets, then there can be no independent review of disclosures when they are made (or not). One has to wait for patent applications to be published, and even then, an invention withheld from the patenting process (for instance, held as a trade secret) won’t show up. I once worked with a university faculty member who insisted he had developed a new chemical process that would be very important if it became generally known, but he wasn’t going to publish it, and wasn’t about to report it to the university. I had no idea whether there was an invention, whether it was sponsored by anyone, and whether the university would have any interest in it. But it was clear the faculty member thought he had something, that he was keeping it to himself, and until he revealed the invention, there was nothing to do.

2. Federal agencies don’t routinely audit university contractors for their accuracy of their disclosure of subject inventions or their decisions with regards to what constitutes a subject invention.

See this 1998 GAO report that repeatedly finds that federal agencies leave it up to universities to comply with Bayh-Dole’s patent rights clause. When the farmer lets the wolves guard the hen house, we shouldn’t be talking about eggs anymore.

And without guidance, university administrators are all over the place about what constitutes a subject invention. The one thing administrators tend to agree upon is that they don’t need to bother with the definition of subject invention that Bayh-Dole made part of federal patent law. University administrators act as if they get to decide when something is a subject invention. They can assert that an invention is a subject invention “just in case” it might be, or if “only $1 of federal money” has been used. This is all nonsense, but then university administrators have no fear of nonsense. The Bayh-Dole definition of subject invention is (leaving out PPVA stuff) a patentable invention conceived or first actually reduced to practice in the performance of work under a funding agreement.

While folks get caught up in the now archaic matter of “conception” and “first actual reduction to practice”–events that were used to determine priority in a “first to invent” world that no longer exists–the issue really starts with the definition of a “performance of work under a funding agreement.” That’s because a funding agreement may fund only a portion of the “work” to be performed, and separate accounting for the various portions of the work is not determinative. And a funding agreement may be extended by the contractor–adding parties to the funding agreement by any assignment, substitution of parties, or subcontract of any type.”

To determine whether an invention is a subject invention, one first must determine the scope of the project for which there is “performance of work” funded at least in part with federal funding. But university administrators don’t do any such thing. Why would anyone expect them to get subject invention reporting right?

3. Federal agencies generally don’t act on their license to practice and have practiced, so don’t care particularly about rights, either by license or acquiring title.

There are public policy reasons for an invention to be determined to meet the definition of a subject invention. A public covenant runs with subject inventions–these are established by 35 USC 200 and called out in FAR 52.227-11. Use the patent system to promote the utilization of inventions arising in federally supported research or development; to promote free competition and enterprise; to promote the commercialization and public availability of inventions with American industry and labor; and to ensure the government has the rights it needs and to protect the public against nonuse and unreasonable use.

It’s clear that subject inventions are not ordinary inventions and that patents on subject inventions are not ordinary patents. If subject inventions were ordinary, then the government would have no need for any additional rights to protect the public. Antitrust law would be sufficient. There’s no working requirement in patent law, but where Bayh-Dole establishes it as part of the public covenant that runs with subject inventions. And there’s no requirement that patents must serve free competition and enterprise, but for Bayh-Dole making it so for patents on subject inventions. Same with a domestic manufacturing preference.

But federal agencies, other in than in some rare procurement actions, don’t care about the government license provided to them by Bayh-Dole. They don’t act on it–and so they squander the license–now over 50,000 times. Talk about government waste. But worse, by failing to act on their licenses, federal agencies decrease the pressure on the owners of patents on subject inventions to offer products at a reasonable price, not a monopoly price, and at the same time, by failing to act, federal agencies cost the American taxpayer billions of dollars in excess costs paid by the federal government, state governments, and medical insurers acting on behalf of government.

If federal agencies don’t care to act on the rights provided by Bayh-Dole, then compliance with the subject invention reporting is about virtual signaling and bureaucratic paperwork–and not about obtaining the rights that government acting in the public interest should exploit for American citizens (and we must keep in mind that while corporations are legally fictive persons, they are not citizens).

4. University administrators get inattentive and sloppy.

Why attribute to malice what can be explained by incompetence? A clerical worker fails to send in invention disclosures, or sends in the wrong stuff, or sends in the title of the invention and not a full technical description, or sends things to the wrong federal agency, or to the wrong address, or messes up with on-line filing, or the clerical worker quits and three months later someone else has to figure out where all the addresses are for invention reporting and get up to speed, and oh who gives a rat’s ass about it all since nothing ever happens other than an agency might ask for folks to get caught back up with the reporting. As one director of a major public university technology transfer office told me regarding a provision in Bayh-Dole’s standard patent rights clause, “We will do it when a federal agency bothers to tell us to comply.”

5. University administrators rely on invention disclosure forms and don’t fact check information provided on those forms against statements of work.

Even then, what clerical worker is going to get up to speed in determining whether an invention does meet the definition of subject invention? One cannot reason from the technical description. One cannot reason from check boxes ticked by inventors. One has to check the grant proposals, the statements of work, the specifications for work. That’s likely not a matter to leave with a clerical worker, an administrative assistant. More likely, one needs an attorney reading grant proposals. But who has the time and money for that?

So university administrators design disclosure forms that include such things as “check the funding source(s) for the work that led to this invention” and “list all current and past support related to this invention” (actual quotes)–and responses to these statements may be inaccurate or misleading. Just because federal funding might have in the past been used does not mean that a given invention meets the definition of subject invention.

I’ve met university investigators that have claimed federal funding for inventions that they admitted were made before the federal funding started–they just wanted to make their federal grant work look more productive. A little dishonesty for a good cause, it would appear, is considered okay.

But to do things right, university administrators would have to read statements of work, proposals, specifications in calls for proposals. Ah, why bother?

6. University administrators give poor guidance to inventors with regard to what constitutes a subject invention.

Here’s a major public university’s guidance for completing the “Invention Funding and Resources” portion of its invention disclosure form:

In Section 8, funding often carries patent obligations. Be sure to include all outside agencies, organizations, or companies that actually provided any expense funding to any inventor for the research that led to the conception or first actual reduction to practice of the invention. Do not list any funding source gratuitously.

This guidance doesn’t help to establish whether an invention is a subject invention. Research funding could involve something other than “expense funding.” That funding could go to someone other than the inventor–the principal investigator spent money, but the graduate student working in the lab made the invention. And research that “led to the conception or first actual reduction to practice” is not so relevant as the research project under which that invention making began. It’s easy to mislead, especially when the one preparing the form has been misled.

If an inventor messes up a disclosure form, then where is it in a university that someone would catch the problem, investigate, and correct the record if required? That’s right–nowhere, nowhere at all.

7. University administrators refuse to comply with the (f)(2) written agreement in the standard patent rights clause.

And one final reason why subject inventions go unreported. If a university does not comply with the (f)(2) written agreement requirement in the standard patent rights clause, then no invention is a subject invention–whatever else goes on–until a university owns that invention. That is, there is no reporting requirement when an invention is made, absent (f)(2) compliance, because no invention meets the definition set out by Bayh-Dole. A subject invention is one owned by a contractor. If no contractor owns, then no reporting is required. Funny that. I have yet to find a university that has complied with the (f)(2) written agreement requirement. Most universities substitute a claim to own every invention they can imagine. Some policies go so far to define invention to include non-inventions (just in case) and to claim ownership of all inventions that can be owned as well as all inventions that cannot be owned (for completeness).

With (f)(2) compliance, inventions become subject inventions when (i) they are or may be patentable and (ii) conceived or first actually reduced to practice (iii) in the performance of work under a funding agreement (which may be extended by contractor actions). It’s just that the inventors are the ones that own the inventions, but they are obligated to report to the university, and the university is obligated to report to the federal agency–but it’s the inventors, not the university, that has the contractual right to elect to retain ownership under the inventor patent rights clause at 37 CFR 401.9.

Anyway, gumming up compliance with (f)(2) means many inventions that would be subject inventions aren’t, and are not required to be reported to the university or to the government–at least not by the standard patent rights clause authorized by Bayh-Dole.


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