USC still misrepresents Bayh-Dole, 2018 version-Fitt 3

Now, for comedy. USC turns from the obligations of the Bayh-Dole act for universities to technology transfer:

Benefits of disclosure and technology transfer include:

Bayh-Dole does not require technology transfer. A contractor may comply with Bayh-Dole by using its subject inventions itself, so long as the benefits of that use are available to the public on reasonable terms. Licensing is not required. Transfer is not required.

Furthermore, things are terribly confused by the combination of disclosure with technology transfer. Disclosure can produce none of the claimed benefits to be listed. Disclosure provides patent personnel with information to pass on to federal agencies–that’s otherwise known as a bureaucratic process. Nothing in that produces any benefit to anyone. It is a process that consumes energy. Endothermic. Encoldering.

The list:

• development of products and services that benefit the public;

This happens about 1 in 1,000 inventions in a meaningful way, and 1 in 200 inventions in a charitable look the other way sort of way. Even so, there’s nothing in “technology transfer” that requires patenting, or if patenting, requires monopolies and exclusive licenses or even requires “development.” Many university-hosted inventions involve research tools, methods, and materials that can be made and used without “development.” There’s no reason to conflate Bayh-Dole obligations and technology transfer, or to conflate technology transfer with patenting, or to conflate technology transfer with the involvement of university bureaucrats.

• economic development through job creation and new companies;

A nice thought, but universities are not able to show any meaningful economic development or job creation from their patent licensing activities. AUTM uses a bogus economic model that takes licensing income (of all kinds, from inventions and non-inventions) and produces an unvalidated “estimate” that can best be described as “jobs-equivalent.” (Such as multiply an estimated total royalty income by the reciprocal of an estimated average royalty rate and divide by an estimated average employee compensation). Most of the confirmed job creation is in technology transfer positions, not in new companies based on university patents.

• attraction of corporate research support;

Except that when a university establishes an exclusive right in an invention and aims to license that right exclusively (if not assign it), then the university can expect only one corporate research sponsor, while being assured that every other company that might have a use for the invention now must work to undermine that invention–design around it, exclude it from standards, contract to avoid it, ignore it. Nice. Besides, it’s utter nonsense in practice that companies show up to support university research because it holds back inventions as patent monopolies on offer for exclusive license only. In practice, the corporate research funding attracted to universities by their exclusive patent positions is miniscule–and we are not looking at what universities have given up in terms of corporate support by claiming those exclusive patent positions. Meanwhile, universities typically do not offer patent-free access or FRAND licensing that might create standards, industry consortia, pre-competitive technology platforms, and other such practices that would invite industrial collaboration. Universities don’t do such things (with a few exceptions) unless they are forced to do so (say, by NSF CRC requirements).

• licensing revenue to further research, and to benefit inventors;

Most universities don’t make enough licensing revenue to “further research.” And universities never account to the public for exactly what research has gotten furthered and what has come of that furthered research. University licensing revenue, for the most part, is like tiny gold bars ground into fine dust and sprinkled over the campus lawns, where it disappears into the soil unnoticed. It’s disingenuous to suggest that by stripping inventors of their Constitutionally provided exclusive rights to their inventions, excluding them from any say in how their inventions are managed, and reducing their share of any income (if as rarely ever), that somehow any of this *benefits* inventors. One licensing officer (not at USC) once made the argument to me that it was only fair that the university’s invention policy covered all inventions and not just those made in work where an employee was assigned to invent because, as his argument went, it would be unfair to all those employees who had to assign if there were some who had the advantage of managing their own inventions. Essentially–we have to treat all our employees the same, so if we must screw over some of them, then it is only fair that we screw over all of them equally. But in policy this is recast to read “benefit inventors.”

There is no question, of course, that some handful of inventors gets some bit of money. And a very few get a lot. It’s just that most faculty can and do make more money from personal consulting than they ever will from a university technology transfer operation. And those that have got a lot of money would in many cases have got way, way more than a lot if the university had not gotten involved.

And now USC walks back on this whole document:

By disclosing IP to the university and participating in the protection of the IP via patents or copyrights,
USC may be able to commercialize your innovations.

We are back to the conflation of Bayh-Dole (patentable inventions the university has acquired) and IP, but now there’s this odd word “participating.” “Participating” suggests that inventors have an option on the matter. The word we might expect here is “complying.” If inventors “participate,” then they have choice–just as USC’s policy on freedom of research and publication makes abundantly clear. But that is not the burden of the prior part of this document.

There’s more–what about “your innovations.” Skip the pretentiousness of “innovations.” What about that “your”? If the document speaks truth, there can be no “your” here. USC claims all IP. Bayh-Dole enables USC to take all IP. Bayh-Dole requires inventors to make a present assignment upfront before anything has been invented, before any research has ever been funded, so that all resulting IP is assigned to USC. There can be no “your” at this point unless inventors do own their inventions, despite all these representations by USC administrators that we have worked through.

And what do we make of the idea that “USC may be able” to commercialize anything? We have heard that Bayh-Dole requires commercialization. Then here it cannot be “may”–it must be that USC administrators are required by federal law to commercialize USC’s inventions, and if they fail they risk loss of patent rights or withholding of federal grants or, perhaps they will be fired. But no, that doesn’t appear to be the case. It appears commercialization is entirely optional. And that’s confirmed by the next sentence:

If successful, you and your co-inventors/creators
will receive a share of the licensing income that is received by USC.

“If” the commercialization is successful–that’s a big “if.” There’s nothing in Bayh-Dole that gives room for universities to build up patent portfolios that keep 98% of inventions behind paywalls so 1 in 200 or 1 in 1,000 might be “commercialized.” Bayh-Dole applies equally to each subject invention a university holds. There is no “if” in Bayh-Dole, except in university administrator dreams and misrepresentations.

There’s also another implication in the use here of “success”–that success is about the money. We might think from the bullet point list above that “If successful” might be followed by “the public will benefit and people will have jobs and companies will collaborate with us.” But no, USC brings this strange discourse on university obligations down to the idea that inventors will get a share of what USC makes, but USC doesn’t have to make anything.

At this point, USC does not point out that under Bayh-Dole, USC must share royalties with inventors. But more than that, Sen. Bayh insisted that inventors had the right under Bayh-Dole to negotiate their share of royalties. Sen. Bayh was wrong about a number of things in the law that carries his name. But perhaps here he was right–Bayh-Dole may well require federal agencies to stipulate that federal contractors cannot be predatory on the rights of inventors. That inventors have a choice whether to disclose, and they have the right to themselves elect to retain title, and if so, then they have the right to decide whether to use the patent system or not, and if they do choose to patent, then they have the rights of a small business firm–they can assign as they please, to whomever they please, unlike a nonprofit, for which assignment is expressly restricted by Bayh-Dole (see 35 USC 202(c)(7)(A)).

This is probably enough.  The document devolves into a sort of Q and A, repeating for emphasis its misrepresentations. A few additional tidbits:

We get this (underlined in the original):

Even if investigators fail to report within the required timeline they are
encouraged to disclose as soon as they are able to in order to demonstrate good faith efforts in
complying with federal regulations.

“As soon as they are able” sounds so like the Beatles’ Rocky Racoon. “As soon as they are able” means “if and when you choose.” Inventors have no obligation to disclose until USC owns their inventions. USC in turn does not have a claim in inventions unless it has directed (or has the right to direct) the research under which an invention has been made (“the course and scope” stuff). “Good faith efforts” here must mean something akin to “virtue signalling.”

And this:

Additionally, on March
13, 2013 the America Invents Act was made effective which transitioned the U.S. from a “first to invent” patent system to a “First Inventor to File” system. Given this new framework it has become important to establish an early priority date when deciding to pursue patent protection.

No. The new “priority date” is now the date of filing a patent application. The folks here can’t seem to be clear. The point is, if one doesn’t rush to patent, then someone else might file sooner. But that doesn’t have anything to do with Bayh-Dole, which is oblivious to first to file.

In the answer to “what do I need to disclose?”:

A “subject invention” is any invention or discovery that is or may be patentable (or otherwise protectable), conceived or reduced to practice in the performance of
work under a funding agreement at USC (reference: Title 35 of the United States Code).

The answer leaves out the most crucial part of the Stanford v Roche decision–a subject invention is “an invention of the contractor.” It is an invention that has been acquired by the contractor. That’s 35 USC 201(e). The bit of “under a funding agreement” sounds simple, but like most things in Bayh-Dole, it isn’t. Funding agreements may be extended by a contractor by “any assignment, substitution of parties, or subcontract of any type.” If a university assigns–any assignment, so assignment of a subject invention–the university expands the parties to the funding agreement. The definition of funding agreement includes work “funded in whole or in part by the Federal Government”–that is, the thing that matters is not the specific federal contract but the project in which the federal contract figures–the inventions that matter are ones made in a project that may be funded *in part* by the federal government. The rules of scope at 37 CFR 401.1 make it clear that the time consideration of funding is not determinative–federal funding could be in part at the beginning of a project or in the middle or at the end. What matters is not the federal funding, or whether federal money was expressly spent, but whether the federal funding supported some part of a larger project of which it was a part. Any invention in that larger project is implicated. Thus, for example, if a university acquires an invention made in a federal project and then assigns that invention to a company using an exclusive patent license, the university is required to also extend the patent rights clause to apply to the company. That means that inventions made in development of the assigned subject invention may also be subject inventions. Really. The logic works–and it makes sense, too.

Furthermore, the rules of scope at 37 CFR 401.1 make clear that a determination of “performance of work” involves documentation of “planned and committed activities” and accounting to show inventive activities did not “diminish or distract” from those activities. USC ignores all this. If USC wanted to help its inventors understand Bayh-Dole, administrators would do well to ask inventors to keep records to show what they proposed (in writing) to do, and whether in any given case their work on an invention was anticipated in that proposal (“planned and committed”) or by being undertaken caused a loss of attention (distracted) or loss of completion (diminished) of the proposed work. If the proposed work was done, and those involved can account for the time commitment they made, and the invention was not clear anticipated by the proposal, then the invention cannot be a subject invention–it fails to meet the federal definition, and nothing USC administrators might say can change that. The definition of subject invention is a matter of federal patent law, not private agreements between university administrators and inventors, and certainly not a matter of private bullying by university administrators.

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