Department of Education Open Licensing and Bayh-Dole Goofiness

We have looked at fresh worthlessness of Bayh-Dole march-in in the context of Bayh-Dole’s defaults on required background invention licensing when a contractor licenses a foreground subject invention. We noted that 35 USC 202(f) provides for federal agencies to include a requirement to grant licenses to background invention rights–but only, apparently, before the agency has formed a contract, any research has been done, and no inventions made and disclosed–so how would anyone know whether to include the background invention licensing requirement?

The background invention right requirement should be in the default patent rights clause, especially for nonprofits. But it is not. We have to assume that’s by design. As a result, any march-in action that involves contractor background invention rights is doomed to failure. And contractors are free to deal in subject inventions for the money without bothering with practical application–wait for people to use the invention, and then sue them. Why be proactive about it when one can play the pig?

Let’s look at one example of how federal agencies refuse to use the government and public interest rights available in Bayh-Dole.

Department of Education in 2018 made its competitive grants require by default that “grant deliverables” (sounds like such would include the “work objects” referenced in Bayh-Dole at 35 USC 202(f)) will be made available via open licensing:

Open Licensing Requirements: Unless an exception applies, if you are awarded a grant under this competition, you will be required to openly license to the public grant deliverables created in whole, or in part, with Department grant funds. When the deliverable consists of modifications to pre-existing works, the license extends only to those modifications that can be separately identified and only to the extent that open licensing is permitted under the terms of any licenses or other legal restrictions on the use of pre-existing works. Additionally, a grantee or subgrantee that is awarded competitive grant funds must have a plan to disseminate these public grant deliverables. This dissemination plan can be developed and submitted after your application has been reviewed and selected for funding. For additional information on the open licensing requirements please refer to 2 CFR 3474.20

Of course, the Department of Education open licensing requirements are their own farce–for one, they don’t apply if the grant deliverable is a modification of prior work that’s not subject to the open licensing requirement or uses materials under license that do not permit open licensing. So that’s utterly easy to work around–just start work on the grant deliverable before the grant starts. Have enough done that the “modifications” can’t stand alone or are useless standing alone. Incorporate some proprietary code or data–done.

But here we are concerned with how screwball Bayh-Dole is on this stuff–now with “work objects.” Here’s the Department of Education regulations again. The open licensing requirement does not apply to, among other things (2CFR 3474.20(d)(viii)):

Grantees or subgrantees for which compliance with these requirements would conflict with, or materially undermine the ability to protect or enforce, other intellectual property rights or obligations of the grantee or subgrantee, in existence or under development, including those provided under 15 U.S.C. 1051, et seq., 18 U.S.C. 1831-1839, and 35 U.S.C. 200, et seq.

The boldfaced bit is Bayh-Dole. Now we have seen that Bayh-Dole permits an agency head to include a background licensing requirement in funding agreements up front. The Department of Education could have done so here. All it would take is for the agency head to approve as a standard provision in Dept of Ed competitive grants a requirement that any background inventions introduced into a grant deliverable must also be licensed with sufficient rights to permit any recipient of the grant deliverable to enjoy all rights otherwise required to be granted in the grant deliverable under the Department’s open licensing regulation. Instead, the Department excludes such grant deliverables if would “conflict with” Bayh-Dole or “materially undermine” (what does that even mean?) the “ability to protect or enforce other intellectual property rights or obligations” (what does that mean?). It would appear that the upshot of all this is that if a contractor holds patent rights, and creates a grant deliverable within the scope of those patent rights, then the Department of Education’s open licensing provision doesn’t apply. Even if the patent rights cover a subject invention, the Department of Education still hasn’t done what’s necessary to be able to require compliance with its open license provision.

Even if the Department of Education tried to use march-in for a subject invention that held up distribution of a grant deliverable, it would fail, especially if the grant deliverable practices the subject invention. If there’s practice of the subject invention by a grant deliverable, then use can be established. What’s left is showing that benefits of that use (not open licensing of the grant deliverable, but use of the invention the grant deliverable incorporates) are available to the public on reasonable terms. The contractor could, for instance, sell services based on the software to the public.

The Department of Education might work it by making use of the grant deliverable a regulatory requirement. Then it could try a march-in based on unmet need because no one else has the right to practice the grant deliverable within the scope of the contractor’s patent rights. That would fail, too, no doubt–because march-in was designed to fail. But why go there? Why hasn’t the Department of Education just created its own default patent rights clause provision under Bayh-Dole requiring open licensing of subject inventions and any other contractor inventions that must be licensed for the public to have the benefit of open licenses to grant deliverables? You know, like what the DOE has done for nuclear weapons systems, propulsion, and the like. Like what NIST has thoroughly muddled by conflating exceptional circumstances standard patent rights clauses with a non-exceptional standard patent rights clause.

Bayh-Dole’s standard patent rights clauses should look like this:

For inventors (37 CFR 401.9)

For nonprofits (the old 37 CFR 401.14(a))

For small businesses (the old 37 CFR 401.14(a) without (a)(k))

For other businesses (the old 37 CFR 401.14(a) without (a)(k) and with no precedence over statutes that require otherwise)

For DOE nuclear programs (the old 37 CFR 401.14(b)).

But of course NIST, perhaps out of pure cluelessness, has conflated most of these clauses into a single gargantuan clause with conditionals pointing out every so often. As far as I can tell, the primary motive was to prevent the awkwardness of citing 37 CFR 401.14(a) provisions as 401.14(a)(a) and the like. Ironing shoelaces.

If NIST hadn’t screwed things up, the Department of Education would have then created (an old style) 37 CFR 401.14(c)–a special clause that builds on 37 CFR 401.14(a) and adds its open license requirement to the patent rights clause. As it is, the special clause would get rolled into the omnibus standard patent rights clause, somehow, murkily.

The justification for adding the clause would be the same justification that led the Department to require open licensing of grant deliverables. The limitation for inventions would be that the license to any patent on a contractor invention or subject invention was restricted to the scope of rights otherwise made available under the required open license.

This is a typical situation in any implied licensing situation where an organization grants a license to “use” a given “thing.” If an organization says, “You may use this thing,” then the happy user has licenses under whatever rights the organization holds in the thing. One cannot say, “You have a license under copyright to do what you want with this computer program” and not reveal that you don’t have a license under one’s patent rights, where you will be, upon using the software, an infringer of the patent right. Open source licenses such as GPL v3 and the Apache 2.0 license work to deal with patent rights in the context of what start out as open copyright licenses. But the Department of Education hasn’t got that far, apparently.

Instead, the Department of Education, throws in a catch-all right at 3474.20(b)(iii):

Otherwise use the copyrightable work

That “otherwise use” is remarkably broad. Restricting the use to the (ugh–such awful usage–works aren’t “copyrightable” they are “subject to copyright”) “copyrightable” work does nothing to limit the scope of “use”–after all, the regulation has just exhausted all the rights under copyright by running through them all expressly–the “otherwise” here has to refer to all the rights that *aren’t* a matter of copyright, such as, say patent rights.

If the Department of Education used Bayh-Dole (35 USC 202(a), (b), and (f)), then it would have a standard clause to do for inventions–both background and subject–what it fails to do in its open licensing regulation and therefore flails around making virtuous-sounding gesticulations that in practice are easily circumvented.


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