10 Oddities of 35 USC 210

The Bayh-Dole Act does not repeal prior law with regard to inventions arising from federally supported research or development. Instead, it selectively preempts statutes (with some exceptions). Here is the start of 35 USC 210(a):

This chapter shall take precedence over any other Act which would require a disposition of rights in subject inventions of small business firms or nonprofit organizations contractors in a manner that is inconsistent with this chapter . . .

This statement is odd in a number of ways.

1. The provision does not repeal or amend prior laws. It makes Bayh-Dole out to be a law in conflict with other laws and asserts precedence. The other laws remain in effect until expressly amended (as some have been). If those other laws–the “Acts”–require inclusion of specific contracting language to make them effective, then that’s not happening. For such a thing to take place, there would have to be in each federal contract or grant or cooperative agreement a patent rights clause specific to each such Act, as well as the one required by Bayh-Dole.

Or, another way, there would be two patent rights clauses–one when an invention was made by a contractor into a subject invention and another for inventions that were not subject inventions but were still made under contract or otherwise within the scope of an Act.

Or, put yet another way, the utter strangeness of Bayh-Dole is that when there is an Act by which Congress has declared expressly its intent to provide rights to the United States as a condition of awarding funding for a given area of federal research or development, a federal agency must determine under Bayh-Dole “exceptional circumstances” in order to require a patent rights clause that implements what Congress has already stated as a requirement. Bayh-Dole’s assertion of precedence amounts to Congress treating its own past express intentions with regard to inventions to be “exceptional” rather than required defaults to be revisited when there’s an actual invention to size up what may be in the public’s best interest, with the contractor bearing the burden to demonstrate that its exclusive control over an invention (but for the government’s practice) better serves the public interest than the federal government or the inventor making the invention available to all.

Under Bayh-Dole, federal agencies have the burden to determine that Congress’s express intent under some other Act is indeed proper public policy. Here, look at bits of 35 USC 202(a):

(ii) in exceptional circumstances when it is determined by the agency that restriction or elimination of the right to retain title to any subject invention will better promote the policy and objectives of this chapter

The policy and objectives of this chapter are 35 USC 200, which otherwise don’t show up expressly in any other provision of Bayh-Dole. Thus, Bayh-Dole’s policy and objective takes precedence over those other Acts unless a federal agency can determine that some other Act’s policy and objectives should take precedence. The burden is placed on the federal agency to decide which Congressional policy and objective to apply with the default being Bayh-Dole’s and the burden to show that some other policy and objective (such as that of a prior Act) might better promote–wait for it–not the public interest but rather Bayh-Dole’s policy and objective.

Here’s that laundry list of policy and objective at 35 USC 200–use the patent system to promote the use of inventions (a working requirement), encourage participation of small businesses (a discriminatory requirement), promote collaboration between commercial firms and nonprofits (a requirement irrelevant to innovation), promote free competition and enterprise (an implicit non-exclusive licensing requirement), promote commercialization and public availability of inventions using US industry and labor (a protectionist requirement), ensure the government obtains rights for its needs and to protect the public from patent misuse (and so preempt 28 USC 1498 and imply that the public should be protected from some otherwise legal uses of the patent system), and to minimize administrative costs (a bureaucratic priority imposed on innovation).

Thus, for a federal agency to determine exceptional circumstances in order to restore the policy and objective of some other Act that addresses inventions made in federal contracting, a federal agency is restricted by Bayh-Dole to show how that Act’s policy and objective–Congressional intent–must serve Bayh-Dole’s Congressional intent. It’s loony all around: that executive branch agencies, because they are authorized to pay out federal money for research or development contracts, are delegated this responsibility to sort out conflicting Congressional purposes–one purpose having to do with the justification to allocate the funding to the agency (for which, federal ownership of inventions is a default condition), and the other purpose being that of Bayh-Dole, which has to do with the conditions on which the federal agency allocates the money to contractors (which now are not the conditions, apparently, upon which Congress allocates the money to the agencies but rather by default are the Bayh-Dole conditions–even if a federal agency wants to change the conditions to match the conditions upon which Congress allocated the money, it simply cannot unless those conditions are already also Bayh-Dole’s conditions, in which case Bayh-Dole does not assert precedence (since Bayh-Dole asserts precedence only for Acts that might require a conflicting disposition of rights in subject inventions).

It’s loony that federal agencies rather than Congress must sort out conflicting purposes. It’s loony that Bayh-Dole is a default from which there is no escape. It’s loony that there’s a bait and switch so Congress can justify funding an agency on one set of legal requirements to be imposed on contractors and then assert that those same legal requirements don’t apply because they are preempted by another set of legal requirements imposed on agencies to pass on to contractors, and even if those other legal requirements ought to apply to achieve some Act’s stated objectives or otherwise to better serve the general welfare, a federal agency cannot use any such criteria to make a determination to use that Act’s requirements. The agency has to use Bayh-Dole’s criteria. Loony.

2. This precedence provision in 35 USC 201(a) is specific to subject inventions. That means that only where Bayh-Dole’s definition of subject invention is met does Bayh-Dole take precedence. Bayh-Dole’s definition of subject invention depends on contractor–not inventor–ownership, and so is necessarily narrower than those other Acts, which focus on the inventions themselves, not on who might own them.

Here, in 35 USC 210, it is clear that precedence only matters for the disposition of rights in subject inventions. If a contractor–any party to a federal funding agreement, according to Bayh-Dole’s definitions–does not acquire an invention otherwise made under contract, or in the performance of work, or however any other Act might define the scope of federal claim to an invention made under contract (etc.)–then that invention is not a subject invention.

3. Subject invention is qualified–only the subject inventions of small business firms and nonprofit organizations contractors are within the scope of the assertion of precedence. The “of” here means ownership, just as it does in “of the contractor” in the definition of subject invention. And that’s weird, because it implies that there can be subject inventions that aren’t owned by a small business or nonprofit. Oh, yeah, inventions owned by inventors. But–the inventors would have to be parties to the funding agreement for that to work.

4. The “disposition of rights” refers to 35 USC 202, which is helpfully labeled “Disposition of rights.” There are three dispositions of rights there: (i) a matter of retention of ownership by nonprofits and small businesses, if they have acquired ownership, subject to disclosure of each invention that has become a subject invention; (ii) requirements on the government for making changes to the retention of ownership in any given funding agreement; and (iii) conditions with regard to subject inventions to be imposed on contractors that accept federal funding–disclosure, patenting and working requirements, government license.

Anything among these three areas of “disposition of rights” that might conflict in any Act becomes subordinate to Bayh-Dole (but for Stevenson-Wydler and any future Act that cites Bayh-Dole). Thus, the entirety of 35 USC 202 is in play. 35 USC 202 relies on 35 USC 201, 203, and 204. Thus, all of 35 USC 202-204 is in play, along with the definitions in 35 USC 201 that these sections rely upon. Any disposition of ownership as between contractors and federal agencies, any means by which federal agencies might consider the disposition of rights (such as dealing with a contractor’s request for greater than non-exclusive rights), any conditions placed on the contractor’s rights–all trigger Bayh-Dole’s assertion of precedence if they might conflict with Bayh-Dole’s defaults.

5. There’s one more bit to this matter of precedence, in 35 USC 210(c):

Nothing in this chapter is intended to limit the authority of agencies to agree to the disposition of rights in inventions made in the performance of work under funding agreements . . .

except that all funding agreements, including those with other than small business firms and nonprofit organizations, shall include the requirements established in section 202(c)(4) and section 203.

The “nothing is intended except” construction is a lark, given that what then is asserted as intended is that all federal contracts must include the government license and march-in, but without, apparently, the mechanisms provided by Bayh-Dole by which a federal agency might alter those requirements in the case of funding agreements (those with small businesses and nonprofits).

6. In 210(c), “inventions made in the performance of work under funding agreements” is used rather than “subject inventions.” Thus, 210(c)’s scope is greater than 202(a) because it does not require contractor ownership. But “funding agreement” is defined to be specific to contractors, and contractor is defined as “any person, small business firm, or nonprofit organization that is party to a funding agreement.” Thus, “all funding agreements” here must be an attempt to use funding agreement generically, outside the definition provided by the Chapter, to refer to federal support agreements with non-small companies and with persons.

7. And in a really odd move, 35 USC 210(c) then asserts precedence over any other Act with regard to the government license (202(c)(4)) and march-in (203). But–the government license depends on the right of a contractor (person, small business, nonprofit party to the funding agreement) to elect to retain title to inventions that the contractor has acquired title to–and march-in is specific to small businesses and nonprofits and subject inventions–ones owned by a party to a funding agreement that must be only with small businesses and nonprofits.

8. If one follows the cascade of definitions to invoke 35 USC 202(c)(4), one must also implement definitions of contractor, Federal agency, and subject invention. Contractor requires the definition of funding agreement, which requires the definitions of small business firm and nonprofit organization. Subject invention in turn requires the definition of invention. Likewise, 35 USC 203 requires the definition of made and practical application. Thus, 210(c) requires the entire set of definitions of Bayh-Dole to be imported into any generic funding agreement with persons or non-small businesses. March-in furthermore requires the importation of 35 USC 204–the screwball US manufacturing preference. 35 USC 204 in turn requires 35 USC 206 (authorization to create regulations to implement).

9. If 35 USC 202(c)(4)’s “in which the contractor elects rights” requires the use of 35 USC 202(a)–where the right of a contractor to elect to retain title is set forth, then all of 35 USC 202(c) must be imported because the election to retain rights is made expressly contingent on disclosure (35 USC 202(c)(1)) and “the provisions of paragraph (c) and the other provisions of this chapter.” If this “If” goes true, then this little bit of 210(c) requires the implementation of Bayh-Dole for all contractors and all federal support agreements, even while declaring it is not the “intent” of Bayh-Dole to do so. If, on the other hand, this “If” is not so and “elects rights” does not require 202(a), then what the heck does it mean for any contractor to “elect rights” in an invention where there is nothing in federal law, certainly not in federal patent law, under which anyone has any right to “elect” rights in inventions?

10. Bayh-Dole does not assert precedence over executive branch patent policy, except in 210(c) for “funding agreements” with other than small businesses and nonprofits. Executive branch patent policy is not established by “Acts”–it is established under the authority of the President to direct the contracting requirements of executive branch agencies and departments.  Clearly Bayh-Dole requires federal agencies to comply with regard to allowing small business and nonprofit contractors that acquire title to inventions made in performance of work under a funding agreement (and thus make them subject inventions) to elect to retain title. But if an invention is not acquired by a contractor, then Bayh-Dole’s contracting provisions don’t apply, and executive branch patent policy does. And there, those Acts take precedence over executive branch patent policy. So even where Reagan issued an executive order that federal agencies should use Bayh-Dole requirements in all their contracting, that executive order cannot and does not countermand by presidential fiat the various Acts of worry to Bayh-Dole.

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