Another question on RE: When does Bayh-Dole not apply?–6

To get at subject inventions, we will cover some of the same ground as that series of RE articles on subject inventions, but from a different angle. Bayh-Dole’s contracting provisions do not apply if an invention made under federal contract is not a subject invention. Most importantly, Bayh-Dole does not apply if an invention made under contract is not owned by a party to the funding agreement. Other federal laws or contracting requirements may apply, but not Bayh-Dole.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. For that, we must look at Bayh-Dole’s definition of subject invention.

Remember, here, “invention” has Bayh-Dole’s definition–a patentable or maybe not patentable invention or a plant variety (which is clearly not patentable) or something otherwise protectable (or not) under the federal patent statute. The “subject” in “subject”  invention means, roughly, “an invention that is subject to a federal claim of ownership under federal statute or executive branch patent policy operating through a patent rights clause in a funding agreement.”

Bayh-Dole’s policy statement (35 USC 200) applies to all inventions (as Bayh-Dole defines them) arising from federally supported research or development. That broad policy statement (not merely an objective), as part of federal patent law, sets the bounds for the property rights in patents on such inventions (see 35 USC 261).

Bayh-Dole’s contracting provisions (35 USC 202, 203, and 204) apply to subject inventions only. Bayh-Dole’s standard patent rights clause is restricted to implementing 35 USC 202, 203, and 204 (see 35 USC 206). So those contracting provisions apply only to subject inventions, not any inventions, not even any patentable inventions made under federal contract. All that disclosure and elect to retain title and filing patent applications and other fussy stuff has to do with subject inventions.

No matter what else, an invention cannot be a subject invention until it is owned by a party to the federal funding agreement–owned by a contractor. Nothing, therefore, in Bayh-Dole or the standard patent rights clause can be used to turn an invention into a subject invention. These provisions do not reach to mere inventions, and therefore don’t apply to mere inventions. Nothing in Bayh-Dole or the standard patent rights clauses can require anyone–inventor, contractor–to turn an invention into a subject invention. An invention if made under contract becomes a subject invention when an inventor assigns the invention to a contractor or a agrees with a contractor to become a party to the funding agreement.

Bayh-Dole does not vest title with contractors. And nothing in Bayh-Dole or the standard patent rights clause can be used to force an inventor to assign. Not even NIST’s recent addition of a requirement that inventors assign subject inventions. If inventors aren’t parties to the funding agreement, then the inventions they make and own cannot be subject inventions. If inventors have agreed to be parties to the funding agreement, then the standard patent rights clause prohibits prime contractors to have any interest in the subject inventions of subcontractors as part of the subcontracting.

Bayh-Dole then does not apply to requirements that inventors assign inventions to contractors that host federally supported research or development. If anything, Bayh-Dole preempts any requirements that inventors assign inventions which are based on the federal funding agreement or federal funding or any other resources provided to the inventors under the funding agreement.  If contractors comply with the standard patent rights clause, then those participating in the federally supported work must agree to be parties to the funding agreement (per the effect of 37 CFR 401.14(f)(2)) and as such, are contractors (per 37 CFR 401.9) and have the same standing as any other small business firm (under 35 USC 202(a)) to elect to retain title in their subject inventions (made under contract, owned by them, now parties to the funding agreement). If they can elect to retain title to a given subject invention, then that right of election preempts any claim that any other party to the funding agreement might place on that same subject invention.

This is not a defect. It is the intended policy. It’s the law. Just mostly no one complies.

If somehow Bayh-Dole did require inventors to assign their inventions to the organizations that hosted their federally supported work, and those organizations were required to file patent applications, then Bayh-Dole would in effect, as part of federal patent law, require inventors to use the patent system. Seems a bit fascist, an offer that cannot be refused. For all that, such an outcome would be fundamentally inequitable, especially for university faculty.

Bayh-Dole’s primary target was and is universities–and therefore the target is university faculty who work on federally funded projects. For these faculty, when they invent, Bayh-Dole–if it were a vesting statute–would require them to assign their inventions to a host institution–one that does not employ them for the purpose of their research. Universities assure faculty of freedom of research and publication. University administrators do not control faculty research. Do not assign it. Do not direct it. Do not review and approve it. Do not determine where and how findings are published. Do not dictate the source of support. For research, universities are not employers of faculty–that is, masters of faculty servants–unless faculty members voluntarily give up their freedom (gawd, why?) in exchange for something else of value–and that something else cannot be just continuing their appointments or getting paid what they are otherwise paid. And even then employment itself is not a sufficient cause on which to base an equitable interest in inventions. Employment is not sufficient. Use of an employer’s resources is not sufficient. So being forced to agree that these are sufficient when they are not is also not sufficient.

Oh, but you say that a university can forbid a faculty member from participating in federally supported research unless the faculty member agrees to assign all inventions. Doing so violates the university’s commitment to faculty freedom of research and publication. So merely being a grasping petty administrator allows one to abrogate a fundamental assurance that faculty have freedom of research and publication? If so, then the whole policy itself cannot be binding, and therefore neither can a demand that a faculty member assign. But, sigh, we are back to regulatory logic, and many university patent administrators are not so good at it.

There’s simply no basis for a university to forbid faculty members from seeking federal funding because they won’t agree to assign inventions made in that work to the university. At best it is just an administrative urge to own, in violation of policy. Somehow dealing in patent rights is so very much important to the university that the university justifies breaching its commitment to faculty for it:

“We so deeply desire to benefit the public by dealing in patent monopolies that we will breach our agreement with our faculty, violate federal regulations, and make up a mostly fake story about the law, our expertise, and our successes for the chance to do so.”

Well now. Bayh-Dole doesn’t require that.

There is no compliance step in Bayh-Dole (and therefore not in the standard patent rights clause) that requires a faculty inventor to promise to assign inventions to the university. And more so, the standard patent rights clause requires the university (and other contractors) to delegate duties specific to inventors to employees for whom it would be equitable for the federal government to claim an interest in inventions. (And faculty, remember, aren’t even university employees for the purpose of their federally supported work unless they agree to be so outside of anything to do with their federally funded work). Faculty investigators become parties to the funding agreement (just as they were with the old Public Health Service funding agreements in the 1960s). They have the same federal right to elect to retain title to a subject invention that any university research host would have, if that university acquired that subject invention.

I get it that university patent administrators don’t do well at regulatory logic. But here the logic is the logic of federal law as applied to university faculty given their assurance of freedom of research and publication. Bayh-Dole does not force faculty to assign their inventions to their universities. Bayh-Dole requires universities to delegate the right of ownership in inventions to their faculty. Bayh-Dole prevents universities from avoiding this delegation by making assignment of their inventions a precondition of participation in federally supported work.

Nothing in Bayh-Dole is predicated on forcing inventions to be turned into subject inventions. Bayh-Dole does not apply to inventions, so it has no authority to force inventions to be turned into subject inventions–not by definitions, not by requirements on contractors, not by requirements on inventors. Bayh-Dole’s contracting provisions apply only when a contractor turns an invention into a subject invention. A contractor turns an invention into a subject invention by acquiring it or by making the inventor a party to the funding agreement. To acquire, the contractor cannot rely on Bayh-Dole. And to make an inventor party to the funding agreement means to cede any claim related to the funding agreement to what is then the inventor’s subject invention.

Companies can have patent agreements with employees because they hire these employees to invent, assign them to experimental work, and can refuse to continue an inventor’s employment if the inventor refuses to assign. Such agreements exist entirely outside the framework of Bayh-Dole.

But universities cannot have these same patent agreements with faculty–they do not hire faculty to invent, do not assign faculty to research, and cannot refuse to continue a faculty member’s employment (i.e., the tenure standard) at least when it comes to assignment of inventions made in federally supported work–even if a university might claim that it has the right to claim ownership of any invention made in extramurally sponsored research. When it comes to federally sponsored research, Bayh-Dole and its standard patent rights clause prohibit such university behavior and require the university to stand down on its claims. If the university can threaten to terminate a faculty inventor for refusing to assign an invention arising from federally supported research or development, then the university is using the funding agreement to take an interest in an invention made by a faculty member who has agreed to subcontractor status–and thus has full standing as a contractor under the federal funding agreement.

Got it? Good. I feel the need to repeat these points because many university patent administrators are terriers and it takes 100 reps or more before they stop destroying the furniture around here.

Bayh-Dole’s contracting provisions do not apply to inventions, only to subject inventions. But Bayh-Dole’s contracting provisions do apply to how contractors can make claims on inventions and on subject inventions–namely, they can’t use a federal funding agreement (compliance with, resources from, resources provided to) as leverage to gain an interest in any such inventions or subject inventions. For which see the Supreme Court decision in Stanford v Roche. For faculty, this means that Bayh-Dole does not force them to give up their freedom of research and publication in order to receive federal support or to use university resources committed to the federally funded work.

Any university policy modified to “comply” with Bayh-Dole is based on a fake premise. Any university policy that stipulates assignment as a condition of federal funding (or federal funding as a subset of extramural funding) violates Bayh-Dole’s standard patent right clause. Any university policy that threatens faculty with termination for not assigning an invention violates Bayh-Dole’s standard patent rights clause.

And if the university claim is that the university refused to comply with the standard patent rights clause, and therefore the faculty member’s invention is not a subject invention but must assign it anyway even though that claim cannot be based on employment, continued employment, use of federal resources, use of university resources supplied pursuant to the federal funding agreement, or being hired to invent or assigned to conduct experiments–the university’s claim is fundamentally inequitable. To avoid breaking the law, a university is forced to state an inequitable claim to own a faculty investigator’s invention.

The only way around this is to have a voluntary agreement with that faculty investigator for which the university provides separate consideration. Not condition of employment. Not condition of continued employment. Not use of university resources. Not some weird non-compete agreement or ethics claim that makes it appear that a faculty inventor does not have a right to an invention acknowledged by federal law because somehow this right would be unethical by preventing the university from attempting to make money from an exclusive patent position in the invention while excluding the faculty member from practicing the invention or helping anyone else to practice the invention (i.e., teaching), and while forcing the faculty member to publish in the patent literature in a form dictated by the university’s lawyers.

Thus, in a weird way, Bayh-Dole does not apply to inventions and by not applying, Bayh-Dole requires universities also to not apply Bayh-Dole as an excuse to gain ownership of inventions made by faculty–even inventions made under a federal funding agreement.

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