USC’s “Bayh-Dole Act Obligations for Universities” overdramatizes–no, misrepresents–Bayh-Dole. USC turns to its own policies. Even here, things are not quite what they seem.
Under the USC Intellectual Property Policy, with some exceptions called out within the policy, the University owns IP that is produced by its employees in the course and scope of their employment.
No doubt. USC may make a claim to the ownership of IP made in the “course and scope of their employment”–but employment alone is not sufficient to sustain an employer’s claim to own inventions. The Supreme Court in Stanford v Roche reaffirmed that much. There has to be something more–a patent agreement, a provision in an employment contract that stipulates that continued employment is contingent on assignment. And there’s also California Labor Code 2870ff, which requires specific notice of the allowable scope of an employer’s claim.
The issue is whether inventions made by employees under *extramural* federal contracts are produced “in the course and scope” of those employees’ “employment.” We can predict what university attorneys will say–they will be pit bulls to protect their work product. But that aside, consider USC policy 3-B(1):
The University of Southern California exists for the common good, and not to further the interest of solely the individual faculty member or the institution as a whole. The common good depends upon the free search for truth and its free exposition.
. . .
Academic freedom protects all faculty. Academic freedom is essential to these purposes and applies to both teaching and research. Freedom in research is fundamental to the advancement of truth.
. . .
Faculty members are entitled to full freedom in research and the publication of the result, subject to adequate performance of their other academic duties, but research and consultation for pecuniary return shall be in accord with University policy. Basic principles on the right of the faculty to freedom from undue restrictions by sponsors and donors are set out in Section 5-B (1), and similar principles apply to educational activities.
Academic freedom is fundamental. Some IP policy then must be subordinate to academic freedom policy. Faculty are assured by USC of their freedom of research and publication. But if USC were to own their work outright, then faculty would not have freedom of publication. A patent application is a publication. That’s fundamental to the patent system–publish your invention in exchange for exclusive rights for a limited time. If USC’s
IP policy compelled faculty to publish in the patent literature, then it would violate USC’s policy on freedom of publication. Simple as that, pitbull attorneys not withstanding. And if USC claims that “course and scope of employment” includes those activities for which USC asserts that faculty have freedom of research, then USC again would violate its own policy in asserting ownership of IP that must necessarily lie outside the scope of what USC controls.
One might then argue that there could be no “meeting of minds” between USC faculty accepting USC’s statements on freedom of research and publication and USC administrators asserting the USC IP policy supersedes these freedoms. “Despite what you might think, you have the freedoms of research and publication only where you don’t do something inventive or otherwise of commercial interest to us.” No meeting of minds–no contract–policy assertion of invention ownership is not enforceable. Of course, any outcome in court depends on factors other than reasoning.
Consider as well the meaning of “employment.” “Employment” does not mean “any pay” or “receiving a salary.” Employment means that a worker is employed, that the worker agrees to be the servant of a master, to do what the master directs or has the right to direct. Faculty don’t conduct research under employment unless they agree to be directed and controlled in that research (or that the university has the right to direct and control that research)–and for that, faculty would have to expressly give up what the university otherwise assures them they have and are protected by–freedom of research and freedom of publication (even freedom from grasping lawyers and administrators).
Thus, USC may claim IP in work that it assigns and directs–“course and scope”–but not in work that faculty take on themselves, such as federally supported research. Furthermore, it is rather an open question whether USC policy controls in matters of federal contracting. The standard patent rights clause in Bayh-Dole is a federal contract, and necessarily takes precedence over contracts formed under state law. Bayh-Dole does not require invention assignment (we have dealt with NIST’s recent attempt elsewhere), and may indeed provide a means for inventors to preempt claims based on state law that inventors must assign to universities, if an inventor elects to retain title in an invention made under contract. For instance, Bayh-Dole’s standard patent rights clause forbids contractors from having an interest in subcontractors’ subject inventions as a condition of the subcontract. Thus, USC is precluded from claiming that the use of its resources in the conduct of federally supported research gives it the right to take title to inventions. Those resources USC allocated to comply with the federal award. The federal government compensates USC for those resources in the grant through direct and indirect costs reimbursements. USC is prohibited from taking an interest in inventions made with those resources, per the subcontracting clause of the standard patent rights clause.
USC administrators won’t agree, but it’s what we might call the Lance Armstrong defense–deny it until someone with enough money proves it on them in court.
The same goes for the next statements:
This includes IP that is produced with the use of University facilities or funds, and IP that is produced by employees of the University in the performance of a written agreement between the University and a sponsor.
It really doesn’t matter what USC’s policies require if those policies are preempted by a federal contract–especially one that requires USC to adopt a different practice.
Consider the misrepresentations in USC’s Intellectual Property policy, which the present statement links to.
(See USC IP Policy at: https://policy.usc.edu/files/2014/02/intellectual_property.pdf).
This, for instance:
Just false. Nothing in Bayh-Dole requires a contractor to retain title to inventions. Retaining title is a choice that a contractor may make once a contractor has acquired title. Nothing in Bayh-Dole gives a contractor any special right to acquire title. The Supreme Court in Stanford v Roche was clear that “retain” title did not mean to “take” title. And there’s nothing in Bayh-Dole about copyright. Even the regulations involving intangible assets at 2 CFR 200.315 don’t have anything to do with a university (a non-federal entity) taking title to those assets.
The Bayh-Dole Act governs rights in inventions made with U.S. federal government funding.
No. Bayh-Dole governs the priority of claims as between a contractor that has acquired title to an invention made under contract and a federal agency’s demand for that title. Bayh-Dole preempts federal statutes under which a federal agency was required to contract to receive title to inventions. Bayh-Dole therefore “governs” only the rights in inventions as between a contractor that has got them and a federal agency that might otherwise want them. That’s the Supreme Court in Stanford v Roche, and any plain reading of the law.
Among other requirements, the Act imposes invention disclosure obligations on the funded researchers,
Nonsense. There’s no obligation for researchers to disclose inventions in Bayh-Dole. The obligation is on the contractor–the university–to disclose subject inventions–those inventions that the university owns–and only then when the university has received a conforming disclosure of such inventions from the inventors.
permits the University to elect to retain title (subject to a worldwide, non-exclusive license to the U.S.
Only to the extent that “electing to retain title” means “to preempt a federal request for title unless the federal agency has secured a modification to the standard patent rights clause as provided by Bayh-Dole.” “Elect” does not mean “take.” But USC does not bother to make this distinction clear. Malfeasance or incompetence?
and requires the University to pursue patent protection
This much is correct.
and commercialization so long as it retains title.
This much is more nonsense. Nothing in Bayh-Dole requires commercialization. The standard in Bayh-Dole is expressed variously–utilization (35 USC 200), commercialization and public availability (35 USC 200), practical application–use with benefits available to the public on reasonable terms (35 USC 201). Commercialization is one way to achieve utilization or public availability, but it is not required. Anyone can see this, with any degree competence in the matter. There are other ways–creation of or participation in a standard, or open innovation, or a pre-competitive consortium, or royalty-free non-exclusive licensing, so that anyone can make and use without the demand that they must only *buy*.
USC also cannot get the new NIST rule making right:
The National Institute of Standards and Technology recently instituted a new requirement that
employees supported by federal grants and contracts provide a written present assignment of their grant/contract produced Intellectual Property (IP) to their institution,
This is not the NIST rule. It’s gibberish. Here is the new NIST language added to the standard patent rights clause at (f)(2):
to assign to the contractor the entire right, title and interest in and to each subject invention made under contract,
The assignment requirement is specific to subject inventions–to inventions “of the contractor,” to inventions already owned by the contractor. The requirement is directed to the university–(f)(2) requires the university to require specified employees to make this written agreement, in a section headed “Contractor Action to Protect the Government’s Interest”–not “Contractor Action to Protect the Contractor’s Interest.” Thus, the new requirement requires each contractor to require inventors to assign to the contractor what the contractor owns. Yes, it is fubar, but that’s what the requirement states.
The Supreme Court in Stanford v Roche was adamant that Bayh-Dole provided no authority for a contractor to have any special right in any inventor’s inventions, even those made under federal contract. Thus, there’s nothing NIST can do to expand the reach of Bayh-Dole by means of regulations that implement Bayh-Dole. Nothing in NIST’s rule change can require inventors to give up rights to inventions except for those inventions that they have already given up rights.
Back to USC’s misrepresentation, then.
provide a written present assignment
Nothing in the NIST rule change requires a present assignment–an assignment in the present of an invention that has not yet been made (or even contemplated–in some misshapen versions of present assignment). The (f)(2) written agreement requirement is of the form “agreement to assign” not “assign now all future inventions.” The present assignment is just not there in the NIST added language. USC just makes that up and claims that it is federal law.
There is a big discussion we could have about how universities got Justice Breyer’s dissent entirely backwards, but that’s for another time. Here we will just remark about how consistently wrong and incompetent university lawyers have been.
along with an agreement in writing to promptly disclose their IP.
The (f)(2) written agreement requirement has always had the disclosure obligation–for subject inventions, not for “their IP.” That is, only for inventions that the contractor owns, patentable inventions, made under contract. And that requirement for disclosure is conditional:
in order that the contractor can comply with the disclosure provisions of paragraph (c) of this clause
That is, the inventor agreement is to disclose inventions that the contractor owns. “Disclose” in (f)(2) means a specific, defined set of elements–those set out in paragraph (c)–and not merely “report” the existence of an invention or its general function. “Disclose” means something more along the lines of “that information necessary to draft a patent application” and to asses whether patent rights are available and if so for how much longer.” The written agreement is akin to a promise to assist, much as is the rest of the (f)(2) written agreement requirements.
A contractor has no obligation to disclose to a federal agency–to comply–if it has received no conforming disclosure from its inventors. Inventors have no obligation to disclose “their IP” under Bayh-Dole. If the university owns the “IP” then it cannot be called “their” IP. They are required to agree to disclose to the university the university’s inventions. Only when the university owns *and* has received a conforming disclosure does the university have an obligation to disclose.
Employees meet this requirement through a one-time response to an email invitation sent from the “IP-ACT” system at USC.
No. Bayh-Dole is set up to require a patent rights clause in each funding agreement. The patent rights clause in each funding agreement gives rise to a new obligation on the part of the contractor to require the written agreement at (f)(2). The university meets this requirement by requiring employees to make their written agreement *after* each federal funding agreement has come into effect. It is only under the funding agreement that the university has an obligation. The requirement in Bayh-Dole at 35 USC 202(c) is specific to federal agencies–what they must require in funding agreements. The law does not apply directly to contractors, much less to inventors.
If Bayh-Dole applied to inventors, then it would appear to require inventors to give up their rights in inventions to organizations that happened to host their work, and would appear to require inventors to use the patent system, whether they wanted to or not. Both requirements run against the Supreme Court decision in Stanford v Roche. Bayh-Dole does no such things. Bayh-Dole applies to federal agencies. The patent rights clauses apply to contractors. Inventors, if they don’t assign their inventions but are parties to the funding agreement, are subject to their own patent rights clause at 37 CFR 401.9, not to the institutional contractor clause at 37 CFR 401.14.
Furthermore, consider how USC claims compliance. The (f)(2) requirement requires a written agreement. How is a response to an email a written agreement? How could one demonstrate that the responder was who one thinks it is? How can one show a meeting of the minds–an agreement–with regard to what is to be assigned–whether now for whatever might be or in the future, when something has been invented and is known? Consider, for instance, whether a faculty member might have a rather different idea of “course and scope of employment” from a university administrator given to doublespeak and weasel wording. Consider, for instance, whether a faculty member might think differently about what it means for an invention to be “conceived” using university resources. Just how does one use the university’s resources to conceive anything, any any usage of “conceive” other than by artificial insemination?
Compliance with both USC and Federal policies requires prompt disclosure of inventions and software to the USC Stevens Center for Innovation via its online portal Sophia.
Bayh-Dole does not distinguish software. Bayh-Dole concerns only patentable inventions already owned by a contractor. While USC policy might require disclosure of software, Bayh-Dole does not, other than as software might represent “the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention.” The fraud in all this is that USC administrators conflate federal law with their own policies. The implication is that the USC policy is the way it is to comply with federal law. But that’s not the truth.