How Bayh-Dole Is Intended to Work, circa 1992, Part 2

We are working through a paragraph from a law review article from 1992, taken perhaps out of context, but setting out how Bayh-Dole was “intended” to work. Our problem is not so much with the law professor who wrote the article over 25 years ago as it is with the broader issue of accepting accounts of “intentions” for Bayh-Dole to substitute for the law itself.

Intention–abstracted from actual human beings–is fiction, fantasy, bluff, distraction, misdirection. Instead, we assert how Bayh-Dole operates, document the basis in the law for our assertion, show that our account addresses each element of the law, and then we can consider whether this operation is in fact desirable as policy. If it is not desirable, then we–humans–can intend to change the law to a more desirable operation. But we have no business claiming that our proposed change was the original intent–abstracted–of the law, or that we don’t have to bother changing the law since we can just assert that no matter the words, our private interpretation of the words is what counts and should apply to everyone, as if we get to make up the law as we want it to be and require everyone to agree that we are right. No, that would be–and is–a crock up.

But Bayh-Dole is a policy crock up. It fails to implement the patent rights clause of the Federal Procurement Regulations put in place just four years before, and folks added in elements of those regulations after the fact as part of the patent rights clause, and the amendments to the law in 1984–just three years after the law came into effect–mess up the law still more, as do NIST’s 2018 changes in the patent rights clause.

Here’s one example. The original Bayh-Dole required contractors to disclose subject inventions within a reasonable time after the inventions were made. That meant that contractors had a standing obligation to identify and disclose subject inventions. In that context, an inventor was to be required to undertake an obligation to disclose all subject inventions to the contractor so the contractor could comply with its disclosure obligation. But in 1984, Congress amended Bayh-Dole so that the contractor’s obligation to disclose to the federal government is entirely conditional on when the contractor’s patent personnel become aware of a subject invention. Congress we must think intended this change. Thus, Congress also intended that inventors should have no obligation to disclose inventions unless someone designated for patent matters becomes aware of the invention.

Another example. 15 USC 2218(d) requires the use of the Nixon patent policy for federally funded inventions made under fire prevention and control legislation. The Nixon patent policy requires federal agencies to take ownership of inventions made in areas that directly address public health and safety. Bayh-Dole expressly preempts 15 USC 2218(d) but does so only for subject inventions. If an invention arises in federally supported research but isn’t a subject invention, Bayh-Dole does not apply. 15 USC 2218(d) applies, or other specialized statutes addressing federal ownership of inventions apply. But Reagan amended the Nixon patent policy in 1987 to require Bayh-Dole for all agencies even where Bayh-Dole doesn’t apply. So the effect of 15 USC 2218(d) is to require, as a matter of federal statute, Bayh-Dole everywhere that Bayh-Dole doesn’t preempt Bayh-Dole. Except that Bayh-Dole doesn’t operate, in its federal contracting part, where inventions are not subject inventions.

So now, apparently, if a contractor fails to acquire ownership of an invention made in work receiving federal support, or a contractor fails to make inventors parties to the funding agreement (as required), then the federal government has no interest whatsoever in the invention, and no means other than antitrust law (or specialty statutes) to control the disposition of the invention. A crock. But instead of calling out Bayh-Dole as broken beyond all recognition, instead people insist that we can fix the law by reference to a mystical “intent” for how the law works. It’s fantasy, cast in the usage of law review articles.

With policy folks this incompetent doing the drafting, we don’t need enemies to research discovery. They come baked into the pie like blackbirds.

Here’s the next assertion about how Bayh-Dole is intended to work:

If faculty develop an invention arising from the research, they follow the disclosure provisions outlined under the law.

Sad day. Bayh-Dole does not outline disclosure provisions for faculty inventors, and the disclosure provisions Bayh-Dole does outline pertain only to subject inventions–inventions that a contractor or grantee already owns.

The disclosure provisions apply to the “contractor” or “grantee.” Here’s 35 USC 202(c)(1), setting out what must go in the standard patent rights clause (and without any italicized words):

That the contractor disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters, and that the Federal Government may receive title to any subject invention not disclosed to it within such time.

The contractor must disclose subject inventions. Not inventors, unless inventors have been made parties to the funding agreement. Furthermore, the contractor has an obligation to disclose only subject inventions. According to the Supreme Court in Stanford v Roche, subject inventions are inventions owned by the contractor. So contractors must disclose only those inventions that they own. Yet more. The contractor’s obligation to disclose arises only when the invention “becomes known” to patent personnel. If an inventor does not contact patent personnel, there is no disclosure obligation under Bayh-Dole.

Thus, when our author writes that

they follow the disclosure provisions outlined under the law

she must mean as well that “they don’t have any disclosure obligations under the law.” But we have to do all the work to reach this understanding. What, then, about the standard patent rights clause–isn’t that considered part of “the law”? Let’s say it is. 37 CFR 401.14(f)(2)–the part of the standard patent rights clause that requires organizations to require employees to make written agreements–has this to say about those employees’ disclosure obligations:

to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the contractor each subject invention made under contract in order that the contractor can comply with the disclosure provisions of paragraph (c) of this clause

Paragraph (c) implements 35 USC 202(c)(1), quoted above. Read carefully now. The “contractor” has no obligation to disclose any subject invention until its “personnel identified as responsible for the administration of patent matters” have made a disclosure that provides all the information necessary for the “contractor” to comply with its disclosure obligations. If an inventor does not disclose an invention to the designated patent personnel, or if the “contractor” does not own the invention–or it is not patentable, or it is not made in performance of work under a funding agreement–then there’s no obligation to disclose the invention to the federal government.

Thus, it was misleading at best to assert that inventors are intended to follow the disclosure provisions of the law. The law does not require inventors to follow any disclosure provisions at the time they invent. Their obligation to disclose is triggered when patent personnel designated by the owner of the invention come to know about an invention that the owner of the invention indeed owns.

If one wants to follow the other fork in this logic–that universities make their faculty members parties to funding agreements–then the obligation to disclose to the federal government still arises only when the faculty inventor makes the invention known to patent personnel designated by the faculty inventor–as, when the faculty inventor retains a patent attorney or chooses university patent personnel to represent the faculty member’s interest in the invention.

If someone asserts that Bayh-Dole intends for inventors to disclose every invention they make with federal funding, that’s not in the law. It’s a misty, free-floating ball of intention visible only to certain gifted pundits. We would then have to consider the proposition that Bayh-Dole was intended to be interpreted by certain gifted pundits who could ignore the text of the law and have us disregard the law in favor of their assertions of how the law was intended to work, as if that intention–even lacking any substantive evidence–was indeed the law.

Before we leave this section of the assertion about how Bayh-Dole is “intended” to work, we need to address one more problem that spans these first two sentences. Here they are again:

Bayh-Dole is intended to work in the following way: the government agency sponsors research conducted by the faculty with the university acting as the contractor. If faculty develop an invention arising from the research, they follow the disclosure provisions outlined under the law.

We  have a problem here of scope. These two sentences make it appear that the “research” is what the government sponsors or funds. But that’s not how Bayh-Dole’s scope is drafted. Here’s the first sentence of the definition of “funding agreement”:

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.

Let’s remove the clutter:

“funding agreement” means any agreement between any Federal agency and any contractor for the performance of work funded in whole or in part by the Federal Government.

The “performance of work” may be funded only in part by federal money. Thus, the “work” may well be greater than the part that is proposed to the federal government for funding. Put it this way. A project is conceived. The federal government is asked to fund part of the project. If an invention arises anywhere in the project, the federal government has an interest in that invention. If a contractor owns the invention, then it is a subject invention and Bayh-Dole applies, preempting any other statute under which the government has an interest in the invention.

Thus, it is not merely that federal government money goes into research from which an invention arises, but more broadly, that government money goes into a project that funds any part of that research. Even the parts of the project that the federal government does not directly fund are supported, as it were, by the part of the project that the government does fund. Bayh-Dole uses various formulas to get at this scope. In 35 USC 200, it is “inventions arising from federally supported research or development.” “Arising from” is very broad. In 35 USC 201(b), it is “performance of experimental, developmental, or research work funded in whole or in part by the Federal government.” “In part” is the very broad part.

Thus, what Bayh-Dole intends is that when a project is identified involving research, experiment, or development and the federal government funds any part of that project, any invention arising from that project’s work, when owned by a contractor, causes Bayh-Dole to preempt other federal statutes (but for Stevenson-Wydler and any later statutes that recite Bayh-Dole–and Stevenson-Wydler has been amended to conform to Bayh-Dole and there are no other statutes, and Bayh-Dole conflicts with FOIA but that’s another incompetency).

We might restate things:

When a contractor’s patent personnel become aware of an invention owned by a contractor arising anywhere in a project that has received at least some federal support for research, experimental, or development work, then the inventors are obligated by their written agreements to disclose the invention to the patent personnel, and the contractor is obligated, when such disclosure has been received, to disclose the invention to the federal government.

That’s how Bayh-Dole is intended to work, at least for this bit of it. It isn’t pretty. It is a mess. But intentions are not necessarily simple, pretty things, especially when baked up by folks working at things too difficult for them to pull off.

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