We are working through when Bayh-Dole does not apply.
Bayh-Dole doesn’t apply to works of authorship or copyright or data or data rights or know how or trade secrets (except to keep trade secrets secret even when the trade secret involves the terms of a license with the government) or trade marks or trade names or mask works or software. Bayh-Dole doesn’t apply to federal funding agreements that are not for research, experimental work, or development. Applies to funding agreements primarily for education or training only to assert that it doesn’t apply other than that assertion. Doesn’t apply to stuff that’s determined to be not patentable (except for plant varieties), nor to stuff that that’s not made with federal assistance. For that matter, Bayh-Dole does not apply to universities, other nonprofits, or small businesses–Bayh-Dole applies to federal agencies, specifying what federal agencies must do with contracting for inventions and licensing of inventions. So Bayh-Dole doesn’t apply to anyone else.
Bayh-Dole engages contractors by means of its patent rights clauses, which are placed in federal funding agreements. When a contractor chooses to accept federal assistance under a funding agreement for research, experimental, or developmental work, a Bayh-Dole patent rights clause comes along. The patent rights clause is conditional. It applies when there is a subject invention. A contractor turns an invention into a subject invention by taking ownership of an invention made under the funding agreement. A contractor may add parties to the funding agreement by any assignment, substitution of parties, or subcontract of any type. So a contractor may also make inventors parties to the funding agreement. Then the inventors are also contractors. When they invent, they own their inventions. Those inventions then are also subject inventions. Got it?
We asked last article why anyone would want to make an invention a subject invention. I’ve never met anyone–not inventor, not company, not investor, no one among the general public, not even English professors–who went, “Gosh, it sure improves the outlook for research innovation success now that that invention has become a subject invention!” Somehow added useless federal paperwork and the involvement of bureaucrats has never figured greatly in accounts of what we need for new things to come to be adopted and used by others. But look at things–“compliance” seems to be the number one worry among university administrators. When was compliance ever a hallmark of innovation success? Geez–perhaps bureaucratic worries about compliance is the primary effect of Bayh-Dole. Even then, it’s mostly fake worry, because in practice virtually no one complies with the standard patent rights clause, and federal agencies enforce only the useless federal paperwork parts of the clause, and ignore or waive or turn a blind eye to the rest.
But there are people–especially university administrators and their legal advisors–who apparently really, really, really want inventions to be subject inventions. They write policies to try to force the issue. They argue that Bayh-Dole requires them to change policy, to comply with Bayh-Dole–even after the Supreme Court said they were all wrong. What sort of bee have these folks got up their pants?
What’s all the more strange, then is that Bayh-Dole, as a matter of practice, largely does not operate–that is, does not apply–to almost everything that’s going on. Folks go out of their way to change policies citing Bayh-Dole and then don’t actually follow Bayh-Dole. What’s with that? A wildly successful law–so the claim is made–that only “works” when people ignore it and turn a blind or corrupt eye. What’s with that?
Other than making a show of disclosing inventions (and often getting that wrong), electing to retain title (and often getting that wrong, too–by “electing” title rather than choosing to keep title), putting a notice of federal rights in patent applications (and often getting that wrong, too–but no one audits), and then filing patent applications (with plenty of room for mistakes here, too, on the time to file, giving notice when choosing not to continue the application process, giving notice on foreign rights)–other than these mostly useless bureaucratic requirements, Bayh-Dole does not operate, the standard patent rights clause is ignored, and thus, Bayh-Dole in practice does not apply. It should. But it doesn’t. Unenforced practice becomes policy.
But let’s say that Bayh-Dole does operate and (in a parallel universe) folks want to comply with (and enforce) the standard patent rights clause. You know, because on some other planet, that standard patent rights clause is the absolutely best thing for research innovation and anything less would be false and counterproductive and an offense against the public interest. In that case, we must look at the definition of subject invention.
Bayh-Dole’s contracting provisions–35 USC 202, 203, and 204–depend on the definition of subject invention. Unlike everywhere else in Bayh-Dole, these contracting provisions are restricted to subject inventions. It’s subject inventions that must be disclosed. It’s subject inventions that the standard patent rights clauses apply to. It’s subject inventions that can be march-in upon for nonuse or unreasonable use or failure to meet health or regulatory needs. Not regular old inventions. Not spiffy goofball inventions as defined by Bayh-Dole. Gotta be subject inventions.
If an invention is not a subject invention, then the contracting provisions of Bayh-Dole do not apply. Even if the invention has been made with federal assistance. Bayh-Dole’s statement of policy still applies–Bayh-Dole’s policy is directed at inventions as Bayh-Dole defines them–but Bayh-Dole’s contracting provisions don’t apply because they are restricted to subject inventions. There’s a long discussion of subject invention starting here: When is an invention a subject invention?–1.
Sigh. This stuff is so far from research innovation. The reason to figure this stuff out is to be able to slam back on the officials that want to ignore Bayh-Dole or misrepresent it or do what’s convenient to them. It’s sort of the “should I join the looters” paradox. If I join the looters, maybe I get some goods, too. If I stand aside and watch the fun, at least the looters leave me alone. But why should I try to talk them out of looting? or actively oppose them? When does their looting become my fight? Why not leave the fight against the lootors to the lootees? One reason to take up the fight is that the looting under Bayh-Dole doesn’t do a lick for public interest, and messes up what otherwise would be the primary non-institutionalized arena for expert research. Bayh-Dole has been a singular failure with regard to outcomes. A trillion dollars in and no one can come up with a non-false, non-bullshit documentation of Bayh-Dole wonderfulness. Just bait and switch proxies. Oh, look, a squirrel. As if we are that stupid.
The Bayh-Dole is a success argument boils away to “the public will benefit from federal research support only if lootors are not scared away by demands that they comply with the patent rights clause.” May as well have no patent rights clause at all. “You may loot, but only if you register everything you take.” Bayh-Dole works, then, because university administrators have argued that they are better looters, more virtuous looters, than anyone else. Just that all their bureaucratic looting doesn’t amount to a pinhead of public benefit.
Here is a strange but true bit. Due to how Bayh-Dole is structured and implemented, there must always be two patent rights clauses for every federal funding agreement: one patent rights clause required by Bayh-Dole that is specific to subject inventions and another patent rights clause that applies when an invention made under contract is not a subject invention because no contractors owns it.
When Bayh-Dole was passed in 1980, there was this second patent rights clause–it was either in federal statute (Bayh-Dole preempts those statutes when an invention is a subject invention, but not otherwise) or it was the Federal Procurement Regulation, which in 1975 codified the Nixon patent policy of 1971, which in turn was a variation on the Kennedy patent policy of 1963–the Nixon variations allowing federal exclusive licensing, allowing the government in marching in to require contractor licensing on reasonable terms rather than royalty-free non-exclusive terms, and codifying the policy so federal bureaucrats could control the interpretation and implementation of the policy across agencies. The FPR was replaced by the Federal Acquisition Regulation in 1984. But the FAR implemented only Bayh-Dole rather adding Bayh-Dole to the FPR patent rights clauses. So we end up with Bayh-Dole, but with no pants, as it were–no patent rights clause for when an invention is not a subject invention. All we have is a general policy statement in federal patent law at 35 USC 200 that has to do with patent property rights in inventions arising from federally supported research or development generally. Bayh-Dole does not even give the Secretary of Commerce authority to issue regulations that pertain to inventions that are not subject inventions. See 35 USC 206. Bayh-Dole only applies, in its contracting provisions, only to subject inventions only.
There’s nothing in Bayh-Dole that forces contractors to make inventions become subject inventions. No mandate, no vesting, no encouragement, no special privileges. If an invention made under contract is not owned by a party to that contract, then the invention is not a subject invention. This outcome is not a defect in policy. Not some technical glitch cooked up by the courts or some failure in the drafting of the law. It is the intended policy.