Federal law on inventions made with federal support, 2

Next, we add citations and qualifications to ground this framework.

Specialty statutes for specific federal purposes control federal claims of ownership of inventions made under federal contract.

See the list of such statutes at 35 USC 210. If a specialty statute controls, it takes precedence over any executive branch policy.

The Nixon patent policy as amended by Reagan’s executive order otherwise controls federal claims of ownership of inventions made under federal contract.

See 15 USC 2218(d), which requires federal agencies to use the Nixon patent policy:

All property rights with respect to inventions and discoveries, which are made in the course of or under contract with any government agency  pursuant to this chapter, shall be subject to the basic policies set forth in the President’s Statement of Government Patent Policy issued August 23, 1971, or such revisions of that statement of the policy as may subsequently be promulgated and published in the Federal Register.

In 1983 Reagan issued a Memorandum to federal agencies to require the application of requirements “the same or substantially the same” as Bayh-Dole for research and development contracts to parties not otherwise addressed by Bayh-Dole:

To the extent permitted by law, agency policy with respect to the disposition of any invention made in the performance of a federally-funded research and development contract, grant or cooperative agreement award shall be the same or substantially the same as applied to small business firms and nonprofit organizations under Chapter 38 of Title 35 of the United States Code.

Reagan got the chapter wrong–it’s Chapter 18, not 38. And his Memorandum would not be “permitted by law” if it was not published in the Federal Register as required by 15 USC 2218(d). Reagan fixed this in 1987 with executive order 12591, which cites the Memorandum and the Nixon patent policy, and was published in the Federal Register:

(4) promote the commercialization, in accord with my Memorandum to the Heads of Executive Departments and Agencies of February 18, 1983, of patentable results of federally funded research by granting to all contractors, regardless of size, the title to patents made in whole or in part with Federal funds, in exchange for royalty-free use by or on behalf of the government;

Bayh-Dole preempts the specialty statutes and the Nixon policy (i) when a federal contractor owns an invention:

See the Supreme Court decision Stanford v Roche (2011):

But because the Bayh-Dole Act, including §210(a), applies only to “subject inventions”— “inventions of the contractor”—it does not displace an inventor’s antecedent title to his invention. Only when an invention belongs to the contractor does the Bayh-Dole Act come into play.

Because a federal contractor obtains assignment;

Here’s the Supreme Court on the matter:

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 it should. The only significant difference is that it does so without violence to the basic principle of patent law that inventors own their inventions.


Because a federal contractor makes inventors become federal contractors who own their inventions.

See the definition of funding agreement at 35 USC 201(b):

The term “funding agreement” means any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government. Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.

A contractor may extend the funding agreement through any assignment, substitution of parties, and subcontract of any type. Thus “contract” in Bayh-Dole must be read to mean “an initial contract between a federal agency and a contractor and all contracts made by the contractor that extend the funding agreement by any assignment, substitution of parties, or subcontract of any type.” All assignments, substitutions, and subcontracts become part of the funding agreement.

The parties to those assignments, substitutions, and subcontracts are parties to the funding agreement, are contractors. See the definition of contractor at 35 USC 201(c):

(c) The term “contractor” means any person, small business firm, or nonprofit organization that is a party to a funding agreement.

A contractor therefore may assign or subcontract directly with potential inventors–persons (here clearly not that fictional corporate “person”) working under federal contract–including independent contractors, volunteers, and even the contractor’s own employees (for instance, ones who work on a federal contract that otherwise is outside the scope of their employment). In Bayh-Dole then “contractor” may be a plural term–the contractor may be the initial contractor (or prime contractor) or may be any party to a funding agreement as the funding agreement is extended by that initial or prime contractor to include other contractors.

and (ii) for all research or development contracts, requiring at least government license and the right to march-in.

Bayh-Dole was amended in 1984 to take into account President Reagan’s Memorandum of 1983, which made adherence to Bayh-Dole’s requirements apply, as a matter of executive branch policy, to all research and development contracts (35 USC 210(c)):

all funding agreements, including those with other than small business firms and nonprofit organizations, shall include the requirements established in section 202(c)(4) and section 203.

Section 202(c)(4) is the non-exclusive license to the government. Section 203 is the march-in provision. To implement either, however, entails the application of much of the rest of Bayh-Dole. 35 USC 202(c)(4) depends on the definition of subject invention, which in turn depends on the definitions of contractor, invention, funding agreement, and made. The section also implies a patent rights clause and the right of a contractor to elect to retain title. It is entirely unclear whether federal agencies in contracting for research or development with other than nonprofits or small businesses have the right to determine exceptional circumstances, under which they can create patent rights clauses that do not require either a government license or march-in rights.

Reagan’s executive order requires federal agencies to follow something almost like Bayh-Dole unless a specialty statute requires otherwise.

Reagan’s executive order altered the Nixon patent policy, which Bayh-Dole conditionally preempts via its preemption of 15 USC 2218(d). But Reagan’s executive order does not alter Bayh-Dole, nor does it preempt the specialty statutes. Reagan’s executive order furthermore does not conform to Bayh-Dole either in its statement of purpose or its directions for implementation. We will explore this in some detail.

This entry was posted in Bayh-Dole and tagged , , , , , . Bookmark the permalink.