Can universities assign patent rights under Bayh-Dole?

Another RE search question: “can universities assign patent rights under bayh dole?”

Answer. Yes. See 35 USC 202(c)(7)(A):

In the case of a nonprofit organization, (A) a prohibition upon the assignment of rights to a subject invention in the United States without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions (provided that such assignee shall be subject to the same provisions as the contractor)

and 35 USC 201(b):

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. Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.

Universities may assign subject inventions under Bayh-Dole–technically, under Bayh-Dole’s standard patent rights clause for nonprofits. Universities may assign without any prior federal approvals to an invention management organization (or any other organization that has a “primary function” managing inventions–that could be most any company that operates an invention patenting and/or licensing unit). They may also assign, with federal agency approval, to any other person or organization that does not have a primary invention management operation. In either case, the assignee must accept the requirements not only of Bayh-Dole’s patent rights clause but also of the special Bayh-Dole requirements for nonprofits–even if the assignee is not a nonprofit.

Thus, it is clear that universities may also assign any patent rights that run with those subject inventions.

Universities routinely assign subject inventions. They do so when they convey subject inventions to research foundations that do their patent work for them, and they do so when they license exclusively all substantial rights in a subject invention (that is, the rights to make, use, and sell–plus the right to enforce patent rights). Universities may withhold title to patent rights in such transactions, but that’s a novelty rather than substantive. The effect of such exclusive licenses is to convey ownership of the subject invention to another party. Universities call that party an “exclusive licensee” but in actuality that party is an assignee. University attorneys will deny this because, well, they have to deny it to avoid admitting to being wrong about it.

Oddly, a university might not allow itself to assign patents, even if doing so would be good for innovation, for economic development, for the development of the invention, or even for the university (such as to avoid liability and expensive bother). But that’s a separate problem. Bayh-Dole clearly establishes standard patent rights clause provisions that permit a university to assign subject inventions and any patent rights that go with such assignments.

Also oddly, for-profit contractors are not restricted with regard to assignment of subject inventions. They may assign inventions as they wish without federal agency approval. When they do assign, the definition at 35 USC 201(b) provides that the assignee becomes a party to the funding agreement and therefore becomes a contractor subject to the for-profit patent rights clause.

What’s odd is why Bayh-Dole singles out nonprofits for added restrictions. So long as Bayh-Dole’s standard patent rights clause applies, why should it matter whether the owner of a given invention is a nonprofit or for-profit (or for that matter a nonprofit engaged in activities for which it is obligated to pay unrelated business income taxes)? Moreover, why is the Bayh-Dole restriction on nonprofit assignments directed at whether there’s a “primary” invention management function rather than a primary “invention development into commercial product” function? And if US manufacturing is the most important consideration in Bayh-Dole (see 35 USC 204), then why doesn’t Bayh-Dole restrict assignments of subject inventions by US-based contractors only to other US-based organizations? There are answers for these questions, but I’ll leave them as a study questions for now.

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