Does Bayh-Dole apply only to patentable IP?

Here is a question at Research Enterprise. Does Bayh-Dole apply only to patentable IP?

Answer: No. In its contracting parts, Bayh-Dole applies to subject inventions, and the definition of subject invention includes more than patentable IP but also restricts what of this “more than patentable IP” is covered.

A subject invention (35 USC 201(e)) is one that

(i) is owned by a party to a federal funding agreement

(ii) is or may be patentable OR protectable as a plant variety

(iii) was made in performance of work under the federal funding agreement

Where “made” means either conceived or first actually reduced to practice. An invention may be first actually reduced to practice–such as testing to demonstrate that it performs as conceived–after it has otherwise met all the requirements for patentability. (See in re Eddie L. King.) And an invention that’s conceived but not yet reduced to practice isn’t yet patentable. So the scope of “made” is broader than patentable subject matter.

Something that’s conceived is just something fully realized in someone’s mind. An idea. An insight. A thought about supper. A complete and entire thought about supper. Every last bit of supper down to the brownie for desert. It’s not a patentable thought, but it is “conceived” and if done under a federal contract, the feds are gonna have a piece of that supper if you ever get around to reducing it to practice and it’s there’s any chance at all that it’s a new, useful, and non-obvious supper.

And “funding agreement” includes any assignment, substitution of parties, or subcontract of any kind. That is, a contractor can add contractors by assigning the funding agreement or any aspect of it, substituting parties, or subcontracting duties under the funding agreement. Bayh-Dole makes assignment clear with regard to nonprofits–if a nonprofit assigns a subject invention, then the assignee must accept the nonprofit’s version of the patent rights clause (see 35 USC 202(c)(7)(A)). Otherwise, when a contractor assigns, the status of the assignee determines the patent rights clause that applies. Once a contractor has extended a funding agreement, the added parties to the funding agreement are also contractors and have the same right to elect to retain title in inventions they acquire and which were made under the funding agreement.

And “work” means a project that receives at least some federal funding at some point. As 37 CFR 401.1 makes clear, neither separate accounting nor chronology is determinative–it’s not that federal money must be spent directly on a given invention, but that federal money at some point supports the project in which the invention has been made. (For the scope, see Mine Safety Appliances v United States.)

Since Bayh-Dole applies to plant variety protection via certificates as well as via patents, Bayh-Dole applies to this one other sort of quasi-IP that’s not patentable IP. That’s part of the answer, then. And since Bayh-Dole applies to stuff that is “conceived” but not yet reduced to practice, and since such stuff is not yet patentable, clearly Bayh-Dole applies to this “non-patentable IP.” For that matter, since the scope of invention is defined to be whatever “is or may be” patentable, the definition necessarily includes stuff that is not patentable but has not been conclusively determined to be not patentable.

There’s another limitation. Bayh-Dole does not apply to all patentable IP, even with plant variety protections added in. Bayh-Dole applies only after a federal contractor has acquired an invention made under a federal funding agreement (see Stanford v Roche). It is not true, despite widespread “guidance” otherwise, that Bayh-Dole applies to any invention made with federal support. Bayh-Dole requires contractors to disclose subject inventions–inventions they have acquired. Bayh-Dole does not require inventors to disclose any inventions that are not subject inventions. Some people view this as a lapse in the law. The Supreme Court did not and observed that the lack of protections for inventors, companies, and other “third parties” would be “deeply troubling” if things were otherwise. Perhaps Bayh-Dole is just this “lapse” short of being unconstitutional.

Nothing in Bayh-Dole or in the implementing regulations for Bayh-Dole, including the standard patent rights clause, requires inventors to disclose to their employer or to the federal government any inventions other than subject inventions. A federal contractor does not have to require inventors to disclose or assign inventions made in work receiving federal funding “in order to comply with Bayh-Dole.” That sort of talk is worse than nonsense–it’s incompetence or malpractice.

Bayh-Dole did not repeal other laws pertaining to ownership of inventions made in work receiving federal support. Bayh-Dole instead preempts those other laws when a federal contractor owns an invention that is otherwise within scope of Bayh-Dole’s definition of subject invention. If an invention made under contract is not acquired by any federal contractor, if any of those other laws applies, then the invention is subject to that law. Bayh-Dole does not then apply.

A federal contractor may make others parties to the funding agreement by assigning, substituting parties, or subcontracting. For instance, if a nonprofit assigns a subject invention, the party receiving the assignment must accept the nonprofit’s patent rights clause–and thus, becomes a party to the funding agreement. See 35 USC 202(c)(7)(A).

A federal contractor may make employees parties to the funding agreement by subcontracting patent rights clause obligations to them. When such an employee then makes an invention under contract, the invention is a subject invention even though it is not assigned to the employer-contractor. In this case, Bayh-Dole’s implementing regulations provide a special inventor patent rights clause that applies to the subcontracted funding agreement. See 37 CFR 401.9. The inventor patent rights clause provides that inventor-owners are to be treated as small business firms and thus have the right to elect to retain title to subject inventions without interference from their employer under 35 USC 202(a).

Bayh-Dole’s standard patent rights clause requires contractors to require their employees, other than clerical and non-technical workers, to make a written agreement to protect the government’s interest in subject inventions. The flow down of the written agreement–that contractors must require it–and the substance of the written agreement–assigning to employees responsibilities under the funding agreement (and its patent rights clause)–make it apparent that when a federal contractor complies with the written agreement requirement, it makes the employees involved parties to the funding agreement. Just that no one complies with the written agreement requirement and instead substitutes a patent agreement that operates outside the funding agreement. And I don’t know of a single university legal counsel that would accept the idea that the standard patent rights clause requires contractors to make their inventors parties to the funding agreement. So expect a legal fight if you take this route. You would be right, but it would take a couple hundred thousand dollars to beat back the university corruption of the law.


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