We are working through an article in the ipHandbook that argues for “best practices” in university ownership of inventions. The article spends little time discussing how faculty are employed in their research work, nor the other requirements of university policy that shape faculty rights with regard to research and inventions. The focus of the article quickly narrows to how a university can disrupt the basic default of patent law–that inventors own their inventions. This is the implied best practice. University administrators must find ways to prevent faculty inventors from owning their inventions. The best way, so the article goes, is to have a written invention assignment agreement (IAA) with each university employee. That’s best practice; that should do it. Let’s see.
The author of the article, B. Jean Weidemeier, having laid out in clear terms the conditions that apply to employer-employee relationships, sets out eight examples in which university-based faculty and student inventors with varying degrees of selfishness and ineptness.
The unreasonable inventor. Gets a three-year federal grant, invents, refuses to assign to the university. Depicted as signing a “clear, unambiguous” invention assignment agreement (ha!–we will deal with that later) with the university and as “signing” the federal grant. Most universities don’t have a start-day invention assignment agreement. University of California does, but it is not “clear, unambiguous.”
Nothing about the university complying with the written agreement requirement in the patent rights clause that very well could knock out the university’s invention assignment agreement. May not be unreasonable at all for her not to assign to the university. 37 CFR 401.9 controls.
The unreasonable inventor you missed. Same as above, but professor doesn’t sign an invention assignment agreement on day 1. I must have missed that the invention assignment requirement was in the offer letter. Usually the offer states it is subject to the policies and regulations of the university. Most invention assignment policies are directed at “university duties” or “within the scope of employment.” Those that reach further tend to overreach and go nutso on definitions. The drafting idea is to be max fascist and then back off when one is forced to.
Here’s Weidemeier’s account of Bayh-Dole.
Because Professor Z received federal funding, 37 C.F.R. § 401(14) applies regarding election of title by the contractor (the university) within two years of disclosure of the invention.
37 CFR 401.14 applies, but “election to retain title” has nothing to do with Professor Z’s assignment obligations to the university. An invention is not even *disclosable* under 37 CFR 401.14 until it is a subject invention–that is, an invention owned by a contractor. 37 CFR 401.14 does not require inventors to turn their inventions into subject inventions by assigning them to the prime contractor. The only thing that reaches to Professor Z in 37 CFR 401.14 is the written agreement requirement at (f)(2). So let’s look at that.
At 37 C.F.R § 401.14 (f), the regulations also require the contractor to have written agreements with its employees (other than clerical and nontechnical employees) requiring (1) the disclosure of all subject inventions promptly and (2) the execution of all papers necessary to file patent applications.
But a subject invention is one that the contractor already owns–that’s what the Supreme Court made clear in Stanford v Roche. Of course, that decision is from 2011, and this article appears to be from 2007 (and why then hasn’t the article been revised or withdrawn?) Thus, the inventor’s obligation is to promise to *disclose the full technical details of the invention* that the university has already acquired.
The sequence is: inventor reports an invention to the university; inventor offers to assign the invention to the university; university agrees it has an interest; inventor assigns the invention to the university; inventor discloses the invention with full technical specs to personnel designated by the university for patent matters–such as the university’s designated patent attorney. University then reports the invention, with full technical specs, to the federal agency. One might see in this sequence that the trigger for federal reporting under Bayh-Dole takes place when (i) a university contractor has acquired ownership of an invention and (ii) the inventor has provided a full description of the invention suitable for use in filing a patent application. When both (i) and (ii) are true, then there’s a subject invention to be disclosed to the federal government. Submission of a disclosure form may not be sufficient to meet the requirement for disclosure. And certainly if the university has not acquired an invention at the time that a disclosure form is submitted, the invention is not yet a subject invention and is not required to be disclosed to the federal agency under Bayh-Dole’s standard patent rights clause.
A bigger problem for Weidemeier is that she leaves off the third key element in the (f)(2) written agreement requirements: (3)–to establish the federal government’s rights in the subject invention. An inventor cannot establish the government’s rights in an invention if the inventor has no rights in that invention. The requirement makes no sense until one realizes that when a contractor acting under a federal funding agreement requires its nonclerical employees to make a written agreement to protect the government’s interest, the contractor is creating a subcontract within the patent rights clause, dealing with employees as independent contractors for the purpose of their invention rights.
With this we can resolve the (f)(2) requirement. When a contractor requires the written agreement, inventors are made parties to the funding agreement and by the definitions at 37 CFR 401.2 are contractors. As inventors, they own their inventions. Since they are also now contractors, their inventions are subject inventions. It’s just that now those inventions are subject to the inventor’s patent rights clause at 37 CFR 401.9, not the university’s patent rights clause at 37 CFR 401.14. Not the most straightforward pathway–nothing in Bayh-Dole is straight–but it makes reasonable sense of the law, regulations, and patent rights clause, especially in light of the Supreme Court decision in Stanford v Roche.
Unfortunately, the university is in breach of its federal contract covering Professor Z’s invention.
Now we launch off into fantasy. The university is not in breach of the federal funding agreement for failing to obtain an assignment from Professor Z. Nothing in the standard patent rights clause requires an inventor to assign any invention to the university unless the university already owns the invention. Nothing in federal patent law–including Bayh-Dole–forces inventors to use the patent system or to assign their rights to anyone if they choose not to use the patent system. And when Weidenmeier wrote up this advice, there wasn’t even NIST’s stupid assignment obligation that inventors had be forced to agree to assign to prime contractors the inventions that the prime contractors already owned–NIST added that in May 2018. Oh, but the university could be in breach of “its federal contract” if it failed to require a proper (f)(2) written agreement–and no university I know of complies with the (f)(2) requirement. Instead, they attempt to circumvent it.
Professor Z has hired an attorney, whose wages are being subsidized by Professor Z’s potential licensee, who has locked Z into a sweetheart deal.
Now it is unreasonable for an inventor to hire someone to help her defend her rights against a university in breach of its federal obligations and demanding her personal property–her invention. As for “sweetheart deals”–clearly unreasonable inventors commit the evil of providing inventions to companies on favorable terms. Heck, that’s what universities were accused of doing when the IPA program was shut down–and what universities continue to do under Bayh-Dole. So give a big belly laugh here for the fantasy that unreasonable inventors might behave just like normal university bureaucrats.
The university scrambles to locate a copy of its latest patent policy, which was revised and mailed to all faculty members last year, and that states:
Like the university has misplaced the policy, that the policy isn’t just in the university’s published faculty handbook or policy series. And for all that, if the university does have a inventor assignment agreement with each faculty member–a contract–then surely Shaw v The Regents of the University of California applies:
When a public employer chooses instead to enter into a written contract with its employee (assuming the contract is not contrary to public policy), it cannot later deny the employee the means to enforce that agreement.
Although the University is entitled to revise its Patent Policy, it cannot do so with respect to Shaw because of its written agreement with him.
Having made the Patent Policy a part of its written agreement with Shaw, the University may not unilaterally revise it as to him.
Or, to put it differently, if the invention assignment agreement asserts that the inventor has agreed to whatever is in the university patent policy, then the university cannot unilaterally change that patent policy and make those changes apply to the inventor. Otherwise, the invention assignment agreement is merely an agreement to agree. Not enforceable. There’s no such thing as a binding future contract (there’s no “I hereby agree to anything that in the future you might require”).
Think a moment. If the university did not have an invention assignment agreement–a contract–then there would be no basis for the Shaw analysis. The policy would control and we would be back to whether the university had the standing to fire a faculty member for refusal to comply with a changed patent policy. We would have to navigate policy on freedom of research and publication, whether faculty governance plays a role in confirming policy changes, and whether inventing (or assigning inventions) is a condition of employment or a later assertion of the university that, while appearing as a demand, is actually rather more like a post-deal request stated somewhat shrilly. But at least we would be free of the added complications that arise because faculty are made to sign an invention assignment agreement that locks in the patent policy as a material part of the contract.
Think of that–each time a university unilaterally changes its patent policy, it creates a new class of employees that are hired under the changed policy, while past groups of employees must be dealt with under the terms of each prior version of the patent policy. That’s what happened at the University of California–pre-1997 employees and others.
Binding a patent policy to a personal contract does one more thing. It means the contract–and therefore the patent policy–is to be interpreted against the nondrafting party. Since faculty members generally have no say in the drafting of the patent policy, their reasonable interpretation of the policy should control. That is, as a contract represents a “meeting of the minds,” the mind that matters is the one that has to deal with the understanding conveyed by the words of the policy. The faculty member has the right to interpret those words reasonably in the faculty member’s favor. Otherwise, again, a university has an incentive to draft gawd-awful ambiguous policy statements and then in each circumstance decide what the words mean. A faculty member won’t know what the words of the policy mean until a university official decides. Again, that amounts to an agreement to agree–a blank check for the university. And we haven’t even got to the part of the policy that permits the university to make exceptions to policy–meaning it can excuse itself from complying with its own policy!