I don’t know what NIST folks were thinking (fortunately). But here’s what may have happened. They may have in fact read Stanford v Roche, but that clearly has not helped them. They are still clueless.
Bayh-Dole applies only to subject inventions. Inventions (patentable, made in federally funded work) become subject inventions when they are acquired by a contractor. Bayh-Dole does not “displace” an inventor’s title to his invention. Bayh-Dole then does not give contractors any special privilege to acquire any invention.
But the Supreme Court adds this helpful bit at the end of its decision:
Stanford contends that reading the Bayh-Dole Act as not vesting title to federally funded inventions in federal contractors “fundamentally undermin[es]” the Act’s framework and severely threatens its continued “successful application.” Brief for Petitioner 45. We do not agree.
The Supreme Court rules that Bayh-Dole does not vest title–and then goes further to argue that not vesting title does not undermine the Act’s framework, does not threaten its continued “successful application.” By contrast, the faux Bayh-Dole contention, led by Stanford with scores of legal representatives from other universities in tow, is that the true “framework” of Bayh-Dole is that contractor-organizations should own the patentable results of federally funded research–even must own, or the law fails. The Supreme Court rejects that point. Repeat: the point is rejected by the Supreme Court. Anyone should reject the point anyway. It’s a stupid point.
Oh, let’s put it in discrete bureaucratic euphemisms: “There is no support for the contention that arbitrary institutional ownership of patentable research findings made in public interest research results in improved benefits to the public arising from the use of those findings. Rather, the overwhelming evidence is that non-selective, compulsory institutional ownership of such research findings works against utilization, against rapid dissemination and uptake of results, against further research, against free competition, against cumulative technology development, interoperability, and standards, and against public benefit–especially public benefit on reasonable terms.”
Or, put in terms of federal patent law: “Congress did not intend Bayh-Dole to displace an inventor’s title to his invention. It does not matter, then, what anyone desires of patent law. Institutional ownership is simply not there as an objective, as vesting, as special privilege, or as mandate.”
In short. It’s a stupid point. No evidence for. Lots of evidence against. And even if there were evidence for–it’s not a function of Bayh-Dole. Stupid.
Whatever one wants to think about a bureaucrat’s thumb in every research pie, it’s not a point that’s part of the framework of Bayh-Dole. Of course, thumb-in-pie surely is a part of the framing rhetoric by bureaucrats who want to sell off the personal property of inventors and think they have found a way to force federal agencies to let go of federal contractual rights to those inventions. Thumb-in-pie is essential, because Bayh-Dole was drafted by NIH legal counsel and university bureaucrats so they could operate a pipeline of inventions made with federal support to the pharmaceutical industry–treating each invention as a patent monopoly to provide to a favored company–regardless of whether a university contractor owned the invention or a federal agency (especially the NIH) owned the invention.
If publicly funded inventors could thwart this pipeline by dedicating inventions to the public domain or providing inventions to standards organizations or permitting everyone to conduct research on their inventions or develop their inventions for private use–if any of this were to take place, why then the monopoly patent pipeline would not operate as intended. There would be competition to the monopoly patent as the key to investment success and the pretension that the only way that the public might benefit from research results is if speculators on the monopoly value of the results also make money.
It is a stupid point. It is an ugly point. It is the point that many advocates for Bayh-Dole make. They may deny it (again, Spinal Tap), but look at their words, look at their rhetoric. Look at their actions. Look at the history. Plain as day. Stupid argument. Ugly intent. Bullshit rhetoric.
The Supremes conclude:
As just noted, universities typically enter into agreements
with their employees requiring the assignment to the
university of rights in inventions. With an effective assignment,
those inventions—if federally funded—become
“subject inventions” under the Act, and the statute as a
practical matter works pretty much the way Stanford says
The Court points out that invention ownership is a matter of private contracting, not Bayh-Dole. The Court’s point is not that the framework of Bayh-Dole is “pretty much” what Stanford claims, but rather that if Stanford wants the benefit of the law (if it really is a benefit), then Stanford should go get assignments in the conventional way. The Supreme Court does not say that federal funding must require universities to get assignment agreements, or even that such assignment agreements are essential to the operation of Bayh-Dole. The only point is that if Stanford or anyone else wants to exploit the law through institutional ownership of inventions made in projects with federal support, then Stanford and all others should mind their assignment agreements, not look to Bayh-Dole to rationalize some special privilege.
The Supreme Court here does not state that a university may impose assignment agreements against its own policies on research freedom and freedom of publication. The Court merely notes that the way to obtain assignment of invention is by written instrument, and if Stanford wants to compel its employees to assign, it needs to have assignment agreements in place–about which Bayh-Dole and its framework have nothing to say. Is it really this hard for NIST to read this stuff and comprehend? I think so.
If a university wants to compel assignment of an invention, the Court instructs, is for the university to do the thing that ordinary people do, and that is to obtain agreements from employees requiring assignment of their inventions. It’s just that Bayh-Dole has nothing to do with compelling such assignments.
But here NIST thinks that Bayh-Dole could have something to do with compelling contractors to compel those same assignments. But that’s exactly what Bayh-Dole doesn’t do, can’t do, because it applies only after an assignment has been made. There is no presumption in Bayh-Dole that an assignment will be made, or ought to be made. NIST cannot give up the faux Bayh-Dole political rhetoric. It’s like failed prophecy. These folks will double down until there’s nothing left to double. To change position now would be to admit being wrong, being duped, being a willing adherent to a cult. That would require confession, conversion, stepping into the light, breaking the code of silence, rejecting the rhetoric of the university patent mafia.
And thus, the Supremes:
The only significant difference is that it does so
without violence to the basic principle of patent law that
inventors own their inventions.
And here’s what NIST latches on to. There’s a way to read this last bit to suggest that the Supreme Court agrees with Stanford that Bayh-Dole’s framework works only if organizational contractors get assignment of inventions made in projects receiving federal support. That’s not what the Supreme Court writes. Inventors own their inventions. The way anyone else gets at those inventions is by agreement. If an employer wants to compel an employee to assign inventions, then get an assignment agreement. For a university to get such an assignment agreement may require the university to deal with its own policies on academic freedom, freedom of research, and freedom of publication. But that’s up to the university–and it is not a function of patent law, or Bayh-Dole as part of patent law.
NIST, however, jumps to the idea that if Bayh-Dole does not compel inventors to assign, that somehow the standard patent rights clause can require universities (and all other organizational contractors) to put this assignment agreement in place. Thus, NIST introduces this language (in bold) in its final rule:
The contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees . . . to assign to the contractor the entire right, title and interest in and to each subject invention made under contract, and to execute all papers necessary to file patent applications on subject inventions and to establish the government’s rights in the subject inventions.
This is NIST’s effort to fix what Sean O’Connor calls the “mistaken assumption” behind Bayh-Dole, that all universities require assignments. O’Connor’s argument is nonsense, but it is in the form of law professor writing, so it looks like something important. NIST thinks that Bayh-Dole’s framework depends on institutional ownership, and the way to get there is by fixing the patent rights clause. It’s a non-fix, because the added language requires contractors to require inventors to assign what the contractors already own, and under Bayh-Dole they don’t already own anything.
So it’s stupid hash. Even the very clause that the assignment language is added to excludes such an the assignment–how else does the next requirement of the written agreement operate–that inventors agree to establish the government’s rights in subject inventions? How can the inventors establish the government’s rights if the inventors now–by the very same agreement–have no rights to convey? Stupid. Oh, of course, the inventors have no rights to convey in inventions that the contractors already own. That’s tautology (or some deeply technical argument about equitable title). But then the contractors don’t need any assignment requirement in the patent rights clause–they have rights already. Stupid.
We are into Spinal Tap territory here. It’s such a fine line between a university making a voluntary agreement with its faculty and other employees regarding invention ownership (clever) and the federal government requiring a university to require its employees to assign inventions to the university to protect the government’s interest in those inventions (stupid).
Deeper stupid is that NIST doesn’t get that the written agreement requirement in the standard patent rights clause is not to protect the contractor’s interest. The written agreement is to protect the government’s interest. NIST: “The government’s interest in inventions is protected by forcing contractors to force inventors to give up ownership of their inventions to the contractors even if the contractors don’t want ownership or are totally incapable of managing those inventions.” Of course, NIST isn’t actually saying that, or even meaning that. God only knows what NIST is saying, and God isn’t telling.
In reality, the standard patent rights clause’s written agreement requirement–developed long before NIST got involved–prevents organizational contractors from making a claim on inventions based on Bayh-Dole. That’s the “framework” of Bayh-Dole in practice. The same thing operates for subcontracts in paragraph (g) of the standard patent rights clause. The written agreement takes the form of a tiny little subcontract that contractors are required to make with each of their technical employees. The employees make the required agreement, become parties to the funding agreement, are therefore contractors–small business contractors–and have no duty to assign their inventions to anyone or even to file patent applications. Radical, but only if one has spent way too long at the faux Bayh-Dole festival.
The standard patent rights clause’s written agreement requirement forces organizational contractors to substitute the terms of that agreement for anything that they might otherwise impose on their employees as a condition of the federal funding, or using resources made available for the federally funded project, or for participating in the federally funded project. An organizational contractor cannot flow down this written agreement requirement to employees and simultaneously require something else. Can’t be. But NIST doesn’t get it. And a bunch of university bureaucrats and their legal advisors don’t want NIST to get it. NIST is allowing itself to be stupid–that’s the charitable way to put it. The other folks–well, you figure it out.
The Supreme Court did not consider the effect of the standard patent rights clause on Stanford’s argument. I am sure they would have found, if they had looked, support for their position. But first they would have seen that each inventor making the written agreement to protect the government’s interest becomes a contractor, and therefore each invention becomes a subject invention but owned by the inventor, not the organizational contractor–and again, there’s nothing in Bayh-Dole or the standard patent rights clause that displaces the inventor’s ownership of what are now subject inventions.
In the absence of a university complying with the written agreement requirement (and Stanford did not comply–no university complies), the Supreme Court is correct that a university must obtain assignment in some way for a given invention to come within the scope of Bayh-Dole and become a subject invention. However, Bayh-Dole, as a part of federal patent law, has no authority to compel inventors to assign their inventions to any third party. One might argue that the federal government does not have the authority under the US Constitution to make such a law–the Constitution provides that the federal government may reserve to inventors exclusive rights in their inventions. There’s no authority for the federal government to reserve those exclusive rights to universities for the benefit of bureaucratic careers attempting to deal in patent monopolies. It doesn’t matter how the federal government attempts to reserve those rights–vesting, first right of refusal, restriction on assignment to anyone else, or arbitrarily forcing employers to require employees to agree to assign their inventions–at least those of their inventions made under contract that the employers already own. It is still so stupid it hurts to keep writing about it.
NIST attempts to fix what they must take to be a flaw in Bayh-Dole’s framework. The fix itself is nonsense. But the fact of the attempted fix points to NIST’s belief that the framework of Bayh-Dole somehow does not operate as it should unless organizational contractors own all inventions made in projects with federal support–or at least those inventions made in projects funded by federal contract, but not grant or cooperative agreement. It’s not even that inventors should be required to offer to assign to the employer, who retains the right to refuse assignment–at least that (still stupid) would allow the employer the ability to choose not own any invention it did not choose to own. As it is, NIST appears to force invention ownership down the institutional gullet. This, so it appears, is what good public policy on innovation is all about: compel those inventions to go down the throat, into the bureaucratic gizzard.
Again, it’s all stupid. But perhaps this bit of Supreme Court advice is what NIST has been smoking.