Has NIST finally created a foobar standard patent rights clause?

Words in laws ought to mean something.

According to Bayh-Dole’s standard patent rights clause, the initial contractor must require its employees to make a written agreement to establish the government’s rights in subject inventions.

But, but, but . . . subject inventions are defined as ones already owned by the contractor.

Inventors then must have no rights in subject inventions with which to establish the government’s rights. On the face of it, the written agreement here makes an empty requirement: inventors must agree to establish the federal government’s rights in inventions for which they don’t have any rights to establish the federal government’s rights.

Same for the NIST addition of an assignment requirement. Inventors have nothing to assign to the contractor, either, if a subject invention is already on that the contractor has already acquired. The contractor is required by NIST to make inventors promise to assign the inventions that the inventors have already assigned. 

Do we conclude that the standard patent rights clause here is foobar? After all, if the written agreement was foobar before, then NIST fooing it up some more doesn’t much matter. Stanford and fifty little university attorney friends went running down the hall in Stanford v Roche with the idea that all inventions made with federal support were subject inventions, and that must mean that Bayh-Dole vests ownership of those inventions with the contractor. The Supreme Court rejected that idea. Congress would have signaled its intent to so radically change patent law. The word “retain” means “to hold” not to “acquire” or, less formally, “to have miraculously vested.”

Let’s say, then, for the sake of making words in the written agreement requirement mean something reasonable, that this is not the meaning we are looking for, that the standard patent rights clause is not foobar, even with NIST’s recent fooing effort.

People have to get out of the mindset that anything that runs against their desires for public policy must be a mistake in the drafting of Bayh-Dole or its patent rights clause. NIST especially has to break the habit of thinking that its job is to make Bayh-Dole come to endorse non-compliant practices, as if these non-compliant practices are what the law “actually intended” to authorize.

The subject inventions that are the subject of the written agreement requirement cannot be ones owned by the initial contractor. They must be owned by the inventors.

But then something must make inventors parties to the funding agreement, so they can be contractors, per Bayh-Dole’s definitions. Otherwise the inventions when made cannot be subject inventions. Inventors might own these inventions, but they would not be subject inventions. And if not subject inventions, then NIST’s fooish new wording wouldn’t apply to them. Nor would anything else in the written agreement requirement.

Thus we see a reasonable role for the (f)(2) written agreement requirement. It requires contractors to turn their inventors into contractors and their inventors’ inventions then become subject inventions, no assignment necessary.

Now the inventors have rights with which to establish the federal government’s rights. And they have a patent rights clause that applies specifically to them (37 CFR 401.9). Ah, now you see how Bayh-Dole works. This is not a mistake. This is the public policy, and it’s consistent with federal patent law, of which Bayh-Dole is a part. And it’s consistent with the Supreme Court’s interpretation of Bayh-Dole.

Here’s the thing: “contractor” is, by quirk of Bayh-Dole definition, technically plural, despite the singular form. We should write “a contractor” rather than “the contractor” and refer to the contractor to which a federal award is first made as the initial or prime contractor.

The required written agreement, when made, expands the scope of Bayh-Dole from only those inventions that an initial contractor might come to own to all inventions made in projects with federal support, regardless of who owns–inventor or initial contractor.

The written agreement, because required by the initial contractor, also displaces any claim that the initial contractor might have on these inventions as a condition of the federal award. An initial contractor cannot simply announce, “Borg owns all inventions you make in this federally supported project” because the borg also is required to announce, in effect, “Borg directs its ants to make a written agreement to establish the government’s rights.” A borg has to have some other basis for any claim to borg ownership of these inventions, one having nothing to do with the federal award or Bayh-Dole or Bayh-Dole’s standard patent rights clause.

The same conditions apply with other subcontracts under the standard patent rights clause. “The subcontractor will retain all rights provided for the contractor in this clause, and the contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor’s subject inventions.” Pretty straight to see that this requirement applies as well to the borg’s initial contractor’s own (and required) subcontracting with each inventor.

Everything in Bayh-Dole has to pass through inventor ownership. And the Supreme Court decreed that Bayh-Dole does not give anyone a special privilege to take ownership of an inventor’s inventions–not the initial contractor, not the federal agency. This is the intended public policy. It is reasonable, even if some people don’t like it or want it. Too fooing bad.

Remove the (f)(2) written agreement requirement and Bayh-Dole collapses to only those inventions an initial contractor comes to acquire. All other inventions stay under prior law and executive branch policy. Try to replace the (f)(2) written agreement with any special privilege for an initial contractor to acquire the invention and one is back to some form of vesting, which runs afoul of the Supreme Court’s decision in Stanford v Roche.

Perhaps here’s what NIST cannot comprehend. One does not turn an invention into a subject invention by requiring inventors to assign subject inventions.

If an invention is not a subject invention, then inventors don’t have to assign it under the new NIST requirement. Bayh-Dole applies only to subject inventions. Bayh-Dole cannot require an inventor to assign to a contractor any invention that’s not a subject invention and so turn it into a subject invention. Can’t happen. No authority to do so. Contempt of the Supreme Court–and NIST should care about that.

Bayh-Dole provides no authority for forcing one contractor to give up ownership of an invention to another contractor. In fact, the subcontracting clause provides just the opposite–contractors cannot demand under a funding agreement rights in other contractor’s subject inventions. When an inventor-contractor owns an invention, nothing in Bayh-Dole can force that inventor-contractor to assign the invention to another contractor.

Bayh-Dole’s implementing regulations anticipate that subject inventions are owned by inventors, and has a patent rights clause for that–37 CFR 401.9. Initial contractors turn inventors into contractors by requiring their written agreement under the funding agreement. The inventors’ inventions are then subject inventions by operation of federal patent law. The inventors are then considered to be small business contractors, but with fewer obligations than required by the standard patent rights clause. That’s the federal policy. Geddoferit. 

What, then, of NIST’s new assignment wording? NIST thought, “While we are revising the regulations, put in an assignment requirement to make the patent rights clause conform with the widespread practice of not complying with the patent rights clause. The Supreme Court said universities should have assignment agreements, so let’s require them to have them.”

And so NIST throws an assignment clause into the written agreement. They may have thought that all inventions made with federal support should, as a matter of public policy, become subject inventions, and thus they would require those inventions to be assigned to the contractors and in so assigning turn them into subject inventions.

Then they slowly (because, it’s the speed at which these things happen in institutional brains) realize that this cannot work. Bayh-Dole applies only to subject inventions. It cannot be used to reach out and turn other inventions into subject inventions, in order to be applied.

But let’s say NIST folks are really clever. So they say–no, no it works like this–yes, the written agreement makes all those inventions subject inventions. But now all inventors are required by their contractor to agree to assign those inventor-owned subject inventions to the contractor. Yes?

But that doesn’t work either. Bayh-Dole has no authority to make that requirement. The written agreement is a compulsory subcontract that acts to delegate rights. If there is one place where Bayh-Dole’s patent rights clause protects inventors, this is it. Inventors are treated as small business contractors when they are made parties to the funding agreement. The contractor cannot claim a right in another contractor’s subject inventions. And it makes no sense to require inventors to establish the government’s rights at the same time that inventors are required to give up the very rights that would enable them to establish the government’s rights.

Thus, the new assignment requirement must apply only to subject inventions in which the initial contractor has equitable title through some circumstance unrelated to the federal funding agreement and not preempted by the federal funding agreement and its patent rights clause. The written agreement preempts every form of assignment but for one in which the initial contractor already holds equitable title. That’s the best spin one can put on NIST’s new rule. Otherwise, NIST’s new assignment wording is foobar and should get tossed by a court, if federal oversight fails to act.


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